Dividends and London, New York mayors call on other cities to divest from fossil fuels

When you think about the big cities of the world, you may not think about one of their biggest assets – pension funds. Most governments still have defined benefit plans, while the private sector has moved to more individual plans which are less expensive to administer. The other aspect is defined pension funds pay a “defined” amount of money to the pensioner irrespective of how the funds make money; if the fund does not do well, in this case the government has to come up with the money (taxes); if the fund does well, everyone is happy.

In an article by Rachel Savage of Reuters, the Mayors of London, UK and New York have decided the pension funds under their administration will no longer invest in fossil fuel investments. The number one reason is climate change.

The pension funds of New York City had $189 billion in assets under administration was to take 5 years beginning in 2018 to divest of its investments.

The City of London had already reduced its holdings from 1% in May of 2016 to 0.2% in September, 2019. The London Pension Fund Authority had $8.5 billion in assets under administration.

Linking to dividend paying stocks, in the fossil fuels grouping are some of the well known dividend paying companies. The issue is do you want to do something from the outside or from the inside? Fossil fuels are going to be part of our economy for a number of years in the future, and the companies are some of the most profitable companies to own. It is possible to follow the lead of the Mayors of New York and London, for their are utilities which earn a good dividend in clean energy.

There are more questions than answers, till the next time – to raising questions.

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