MONTGOMERY COUNTY, Maryland’s largest locality, is a bastion of liberalism whose do-gooder instincts occasionally trump common sense. That’s the case with the proposal by County Council members who would mandate the sale of $65 million in oil, natural gas and coal company stocks held by employee pension funds.
The idea behind the divestiture scheme is to strike a symbolic blow against fossil fuel consumption, which the legislation’s sponsors rightly identify as the principal culprit behind climate change. A number of other left-leaning cities and localities around the country, notably San Francisco, have adopted similar steps, although Montgomery’s measure would go further than most by ordering divestment rather than suggesting it.
The problem with such symbolism is that it’s no more than a feel-good gesture — a hypocritical one — that would achieve no actual reduction in carbon consumption while imposing very real costs on the county’s pension fund, on which tens of thousands of retirees depend. The hypocrisy of selling off fossil fuel firm stocks — just $65 million out of pension funds worth $4.3 billion — is that Montgomery, like every other locality in the United States, would continue to consume fossil fuels for countless purposes: to run police cars, ambulances and fire engines, and to heat and cool county-owned buildings, to name just a few.
What’s more, selling stock in select individual companies, identified by a national movement called 350.org, would be an exercise in arbitrary investing. After all, the county’s pension funds would continue owning shares in index funds, private equity firms and other holdings that might include businesses whose profits stem directly or indirectly from the use of oil, gas and coal. Purifying an investment portfolio of such positions — and determining which positions merit divestment, and according to what criteria — would be a nearly eternal project.
That’s not a suitable project for a public pension fund, whose trustees have a fiduciary duty to maximize earnings for the benefit of tens of thousands of present and future retirees, not plunge into complex philosophical or scientific examinations of corporate fossil fuel consumption. (Were they to attempt it, they might find that some major fossil fuel firms are also undertaking major research and development projects in sustainable energy.)
The last time the county enacted a divestiture measure was in 2008, when council members unanimously ordered its pension fund managers to dump stocks tied to Sudan over its human rights outrages in Darfur. That modest step — a handful of equities in small firms were sold — resulted in some $230,000 in transaction fees. Divesting the funds of fossil fuel holdings would cost much more.
And why single out those companies when so many others do so much harm? Coca-Cola? A major contributor to obesity. Volkswagen? An emissions cheater. Pfizer? It deprives the U.S. Treasury of untold millions of dollars by relocating its legal domicile overseas. Blameless corporations are nice if you can find one, but who’s to judge which transgression merits divestiture?
The irony is that Montgomery is a leader among local governments in real, not symbolic, policies to reduce carbon consumption. Better stick to those and leave symbolism aside.
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