Seattle has divestment fever. Seattleites are closing bank accounts, rearranging retirement portfolios, and targeting city policy in the hope that our community of 650,000 can do its small part to deprive the fossil-fuel industry of the financing it needs to stay afloat.
The primary target of this action is Wells Fargo, a major financial backer of the Dakota Access Pipeline, which the Standing Rock Sioux Tribe contends would imperil its drinking-water supply and despoil sacred grounds. Last week activists staged a demonstration at the bank’s downtown branch—part of a nationwide action that organizers claim caused $44.5 million to disappear from Wells Fargo and other banks supporting the project. But the main event, for Seattle, will come later this month or early next, when the City Council considers Councilmember Kshama Sawant’s ordinance to divest $3 billion in city money from the bank. More significant, Sawant’s ordinance would better equip the city to account for a bank’s social responsibility when choosing whom to do business with.
The City Council should quickly pass this ordinance, and the mayor should sign it.
Regarding the ordinance’s immediate aim, divestment from Wells Fargo, the City of Seattle has already shown a willingness to rebuke the bank following the revelation of unscrupulous business practices. Last fall, city leaders pulled out of a contract with Wells Fargo that would have put the bank in charge of $100 million in bond financing for Seattle City Light. The city took this firm and correct action after it was revealed that Wells Fargo had been opening sham accounts in its customers’ names to collect the fees on those accounts. Mayor Ed Murray and Councilmembers Tim Burgess and Bruce Harrell noted in a letter announcing the city’s action that Seattle “expected far better from its business partners.”
That logic could also apply to Standing Rock. While there remains significant debate over whether and how the pipeline should proceed through North Dakota—with the election of Donald Trump, whose company is a financial supporter of the pipeline, tribal leaders are bracing for the worst—City Hall has made its stance on the issue clear. Through a resolution brought by Councilmember Debora Juarez, the Council unanimously expressed its opposition to the project and the violent means by which the pipeline company has tried to put down the protests at Standing Rock.
With such a resolution on the books, it verges on duplicitous for the city to remain in a $3 billion relationship with a bank that is directly funding DAPL.
As is often the case with divestment efforts, a healthy amount of skepticism surrounds Sawant’s measure: Where would she have the city move its money to? In the universe of global finance, there are only so many players. And if you dig into the books of nearly any of them—JP Morgan Chase, Bank of America, Citigroup—you’ll find something rotten: private prisons, war profiteering, fossil fuels galore. Done haphazardly, divestment from Wells Fargo would merely set Seattle up for the similar fight a few years down the road. However, as written, Sawant’s ordinance appears to lay a path to avoiding future conflicts by allowing the city to, in Sawant’s words, “select a bank using much stronger social-justice criteria.”
As Sara Bernard reported last week, many in the financial industry have expressed deep distrust of this kind of socially responsible investing. Using the cover of “fiduciary responsibility,” advisors can argue that as long as a company isn’t outright breaking the law, its profit margin should be all that matters to investors. Yet an encouraging body of evidence is showing it actually makes financial sense to take social and environmental justice into account when investing. As Bernard reports, “Study after study—even one that analyzed some 2,000 different studies—supports the idea that there is no discernible financial difference between socially responsible investing and traditional investing.”
For a City Council that has, with strong constituent support, lent an institutional voice to many just causes through resolutions, it only follows that it should do the same with its dollars.