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Burnaby could soon invest $20M in fossil fuel-free fund

The City of Burnaby is joining a neighbouring city in calling for municipal divestment from fossil fuels and could commit up to $20 million to a fossil fuel-free portfolio.
burnaby city hall
Burnaby City Hall.

The City of Burnaby is joining a neighbouring city in calling for municipal divestment from fossil fuels and could commit up to $20 million to a fossil fuel-free portfolio.

The City of New Westminster put out the call for cities to be able to invest in a short-term fund through the Municipal Finance Authority of B.C. that would exclude fossil fuels.

This comes roughly three years after the MFABC declined to create a divestment fund, citing difficulties in determining which companies are fossil fuel-related, challenges with reducing diversity of investments while maintaining steady returns and a lack of available fossil fuel-free fixed-income investment funds.

But New West city staff told council in January the MFABC has since “received a lot of interest” in divestment.

“They expect to be able to announce that at their AGM, and they have said we could share that information,” said Colleen Ponzini, the city’s director of finance. “The fund would be very similar to the bond fund that we currently hold with the MFA, so it would be a very good product for the City of New Westminster.”

In December, New West sent a letter seeking support from Burnaby in pushing MFABC for the creation of a new investment pool with a focus on socially responsible investments (SRI) – such as divesting from fossil fuels.

The matter was put to the City of Burnaby’s financial management committee, and it was recently sent to city council for consideration.

According to a staff report, the city previously expressed an interest in socially responsible investing to MFABC, and in 2017 the city supported investing up to $20 million in a new SRI fund.

But there wasn’t enough support among B.C. municipalities for MFABC to create such a new fund, so instead Burnaby City Hall invested in a fossil fuel-free investment fund with the Bank of Montreal. Staff reportedly continue to seek further viable SRI funds to invest in.

As more cities declare a climate emergency, and more express interest in an MFABC SRI fund, MFABC has since been able to negotiate a new approach with financial managing firm Phillips, Hager and North to accommodate divestment.

In a report to council, the director of finance, Noreen Kassam, said the city could commit between $10 million and $20 million to an MFABC-managed SRI.

City council voted to endorse the request for a new MFABC SRI fund, and the city will communicate as much to the City of New West and MFABC.