Close to Home: Divest public funds from fossil fuels
In December 2019, following a spirited discussion by supervisors and citizen commentators, the Sonoma County Board of Supervisors adopted unanimously a remarkable resolution. Making note of the manifest connection between burning fossil fuels and the appalling frequency of catastrophic wildfires, they directed Treasurer-Tax Collector Erick Roeser in part as follows:
“… Investment in the fossil fuel industry is inconsistent with (environmental/social/governance) investment principles. (The supervisors) request that the County Treasurer make no new or renewed investments in fossil fuel development corporations to the extent that other, more socially responsible investments achieve substantially equivalent safety, liquidity, and yield.”
The Sonoma County treasurer manages money on behalf of scores of public agencies. They entrust surplus resources to the Sonoma County Pooled Investment Fund to guarantee secure, responsible management of public money. To name just a few: Animal Welfare, the Office of Education, Health Services, Homeless Emergency Aid, Public Health and virtually all fire and school districts.
As the fund’s manager, Roeser enjoys considerable latitude and bears fiduciary responsibility in deciding where and how to invest these funds.
Since December 2019, however, Roeser has contravened the spirit of the supervisors’ resolution by maintaining and adding to the county’s deposits in several large banks that appear prominently in the Fossil Fuel Finance Report 2020. The report, published by the Rainforest Action Network, lists the major banks financing fossil fuels globally. Roeser’s new or renewed certificates of deposit in these banks amount to $236 million of Sonoma County pooled investment funds in the third quarter of 2020 alone.
We can do better than financing this climate-altering, wildfire-spawning industry with our tax dollars.
Imagine if we were to deposit that $236 million in our own public bank. Our money could be used in partnership with local community banks and credit unions to provide low-interest loans for small businesses, affordable housing, infrastructure and renewable energy to serve the public good.
Several structural possibilities are available. For example: California’s Public Bank Act, adopted in 2019, enables the chartering of public banks by regions and municipalities. With a portion of Sonoma County’s pooled investment funds, we could capitalize a county public bank, or a regional bank formed via a joint powers authority with other North Coast counties.
A great advantage of public banks, following the lead of the legendary 101-year-old Bank of North Dakota, is their relatively low risk profile. Unlike privately owned banks, public banks need not concern themselves with achieving the highest possible return for investors. Their mission is simply to serve the public good by financing public projects and other social benefits.
They work in tandem with credit unions and community banks, increasing the latter’s lending scope. And interest on the low-interest loans they create is paid not to private shareholder accounts but to the public treasury. Consequently they are more economically and socially sound, and far less likely to fail, than the privately owned megabanks, investment funds, etc. that currently provide our only access to large-scale financing.
We should seize this opportunity to repurpose our county investments and thereby set our financial future on an environmentally and socially sound footing. Public banks are an idea whose time has come. Let your elected officials know that you desire a public bank for our county, and thank them for whatever support they provide.
Shelly Browning and Philip Beard are founding members of Friends of Public Banking Santa Rosa and participating members of the California Public Banking Alliance.
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