Temporary Socially Responsible Investing Committee FAQ
Why was this committee formed?
As outlined in Resolution #37036, consistent with its responsibilities to the residents of the City of Portland, Portland’s City Council has a social and ethical obligation to seek to avoid adding to its portfolio securities issued by corporations that undermine efforts to create a prosperous, educated, healthy, and equitable City. The City’s Investment Policy does not currently include any social or other non-financial criteria to guide the City’s direct investment in these securities.
What types of corporate behavior is City Council concerned about?
City Council has identified six corporate behaviors that undermine efforts to create a prosperous, educated, healthy, and equitable City: engaging in practices that damage the environment, engaging in practices that damage public health; engaging in abusive labor practices, violating basic principles of corporate ethics and governance, engaging in extreme tax avoidance strategies, or exercising such a level of market dominance as to disrupt normal competitive market forces.
Are there any challenges involved in incorporating socially responsible principles into the City’s Investment Policy?
By law, the City may purchase only short-term (out to three years) corporate bonds. Oregon law also requires a credit rating of no lower than AA- for corporate bonds and A for Oregon issuers. Because of these and other restrictions, the list of acceptable corporate bonds in which the City can invest directly is very small. Currently, only 43 companies meet these criteria. In addition, fast-paced and dynamic market characteristics coupled with these limitations can make selecting the City’s investments very challenging.
Why didn’t the committee create the do-not-buy list?
This was not part of the committee’s charge. Instead, the temporary advisory committee was charged with the first step in developing the City’s new investment policy—determining how the City can incorporate socially responsible criteria into its investment policy.
Specifically, the committee was charged with considering the cost, effectiveness, and practicality of the following two options: 1) Creating a standing advisory committee of public members that periodically makes recommendations to Council about a list of companies and/or industries in which the City shall not invest its cash assets; and 2) Hiring a firm with expertise in social and environmental investing to advise the Council on managing its corporate investments. However, the committee was invited to identify other strategies as well. The committee was not charged with creating a do-not-buy list.
Will this committee be permanent?
No. The charge for this committee expires in July 2014.
Will this do-not-buy list call for immediate divestment in the corporations on the list?
No. To avoid creating volatility in the City’s portfolio, the do-not-buy list would apply only to future investment purchases.
Do any other cities incorporate socially responsible principles into their investment policies?
On a very limited basis. You can view an analysis of other local government approaches here.
What are the Committee’s recommendations?
You can view the Committee’s final recommendations to Council here.
What happens next?
Committee members will present the committee’s report to Council for acceptance on August 6. Council will then determine the next steps.