A New Westminster councillor is concerned the city’s investment policy may be at odds with some of the city’s values.
Council recently received a staff report about proposed changes to the City of New Westminster’s investment policy, which aims to: make investments that ensure the preservation of capital in the overall portfolio; ensure enough funding is available to meet all of the city’s operating requirements; and attain a market rate of return on investments. Staff brought an updated investment policy to council for its consideration, as aspects of the 1998 policy are dated and need to be revised.
According to a staff report, the city’s practice is to hold most of its investments in the Municipal Finance Authority’s Pooled Investment Funds, including the Money Market Fund, Intermediate Fund and Bond Fund. By investing through the MFA, staff said the city takes advantage of the finance authority’s professional investment managers and has access to “a well-diversified portfolio of investments, which includes higher yield instruments that the city would not otherwise be allowed to invest in under the Community Charter.”
Coun. Patrick Johnstone expressed support for ethical investments and divestment in fossil fuels. He said the city has supported resolutions through the Union of B.C. Municipalities to the Municipal Finance Authority to provide options for divesting in fossil fuels.
“It hasn’t really gotten anywhere,” he said. “The Municipal Finance Authority, with whom we invest about $120-million, the bulk of our reserves, have not really been proactive in providing those types of options.”
Johnstone said a lot of cities in the United States are now going through divestment processes, but that’s difficult for New Westminster to do individually. He said the only practical way to pursue more socially responsible investments is through the Municipal Finance Authority.
“I believe that when we are investing in the oil industry, we are not investing in the value of that oil in the ground, we are investing in the value that oil will provide when we take it out of the ground and put it into the atmosphere,” he said. “If we believe, as I believe this council does, that we are not going to be able to take all of that oil out of the ground and put it into the atmosphere without significant repercussions for the planet and that putting that carbon into the atmosphere is going to result in significant costs for the city, for local governments, then we are effectively, by investing in the oil industry betting against ourselves.”
Through its investments, Johnstone said the City of New Westminster will profit from the twinning of the Kinder Morgan pipeline that will carry diluted bitumen through pipes near the Brunette River – at the same time it is opposing the project through the courts and regulatory processes.
“We are investing in the very companies that will profit from that pipeline being built,” he said. “It doesn’t make sense to me that we are doing that.”
Instead of approving the city’s revised investment policy, Johnstone believes it’s in the city’s self-interest to consider the potential for divestment in fossil fuels and more ethical investing choices.
“I can’t support that the way it is,” he said of the policy. “I would hope we can talk about updating our investment policy in a way that provides us with options – our investments not only represent the principles that this council supports when it comes to climate change and when it comes to fossil fuel industry in our region, but provides us with better economic security.”
Instead of approving the proposed investment policy, council referred it back to staff.
Fast facts on city’s investments:
* The city’s investment portfolio had a balance of $159 million (market value of $159 million) as of Dec. 31, 2017. That’s $7 million higher than it was Dec. 31, 2016, which is mainly due to payments received from casino funding known as development assistance compensation.
* The city’s current investment portfolio has $118 million in Municipal Finance Authority (MFA) intermediate and bond funds. A staff report states the MFA is capable of generating competitive returns due to fewer restrictions through legislation than that of municipalities.
