WILMINGTON — The City of Wilmington’s investment portfolio, at least the portion it has direct control over, now is intended to be free of fossil fuel assets.
READ MORE: Utilities Commission approves Duke’s carbon plan ahead of schedule
At its Tuesday meeting, the Wilmington City Council voted 5-2 for a resolution directing the city manager — the newly appointed Becky Hawke — to “support fossil fuel-free investing strategies.” Council members Luke Waddell and Charlie Rivenbark dissented.
Specifically, the resolution mandates the city exclude direct investment in commercial paper issued by companies engaged in the extraction and/or production of fossil fuels — coal, oil, and natural gas.
Council member David Joyner, who described himself as a “climate change candidate” during his 2023 campaign, announced his intentions to bring a resolution forth several meetings ago. He also prefaced Tuesday’s conversation with a press release last week, noting his belief that Wilmington would become the first North Carolina city to adopt this kind of strategy.
“This investment strategy ensures that Wilmington taxpayers’ money doesn’t undermine our efforts locally by supporting the exact same pollution we’re trying to mitigate,” he wrote in the release.
The city maintains cash and investment balances to meet operating needs of the city, including unexpected costs. The city’s goal is to pursue investments with the highest yields while also balancing financial responsibility over public funds. Municipalities have to follow what investments and practices are allowed in state statute. For example, the city is not allowed to invest more than 25% in certain debt instruments — commercial paper, agency bonds, certificates of deposit — though U.S. Treasury securities and investment pools have no restrictions.
The fossil fuel resolution applies to commercial paper alone and not other debt instruments. Commercial paper, which makes up 15% of the city’s portfolio, is unsecured, short-term debt issued by corporations. If issued by Exxon Mobil, for example, the City of Wilmington would not look to invest moving forward.
Joyner said he worked with former city manager Tony Caudle and staff on the draft resolution, particularly deciding where to “draw the line” on what constitutes a fossil fuel investment. He used the city’s previous investment in Toyota as example; under the passed resolution, this investment would still be permissible because the company produces cars — cars that emit fossil fuels, yes, but there’s no direct production of the energy itself.
Commercial paper tends to have the highest potential for a fossil fuel link because it’s issued by corporations. The other debt instruments either have no exposure or indirect exposure to fossil fuels, though the resolution specifically makes an exception for investment pools.
The city is involved in the investment pool North Carolina Capital Management Trust. The city does not have control over the allocation of investments in the pools. The trust also makes up the bulk of the city’s portfolio at 31%.
Joyner said Tuesday there’s “not a ton of divestment” expected to result from the vote; a city spokesperson confirmed shortly after publication no divestment was needed.
Waddell commended Joyner for his passion. However, he opposed the proposal, describing it as a distraction from the “core issues” Wilmington faces, such as homelessness, crime, affordable housing, infrastructure, creating parks, and planting trees.
“I think there’s a real opportunity cost to our staff that is also part of our fiduciary responsibility to the people that we represent,” Waddell said. “And every hour, every minute the city staff is spent screening for fossil fuel ties or whatever pet project some city council member comes up with is time that’s not spent addressing real operational challenges that we see here every day and should be our main focus.”
Waddell has announced his plans to reintroduce an anti-camping ordinance targeted at curbing the homeless’ presence in downtown Wilmington, which he brought up last year but failed to gain council approval. He has also proposed a youth curfew after a rowdy July 4 weekend that ended in a fatal shooting, though a minor wasn’t involved. Neither item was added to Tuesday’s agenda.
Council member Kevin Spears pushed back on Waddell’s comment, noting other council members bring forth pet projects all the time. He also questioned if the resolution would require any extra work beyond Finance Director Martha Wayne and her team’s current jobs, to which Wayne responded no.
The city works with four brokers, according to Wayne. When the city is looking to invest, she said her team contacts them with the amount they want to invest and the duration they would like it to mature in. Two brokers have to respond in order for the city to make a decision, though if either brought back a commercial paper investment in a fossil fuel company, the team would simply ask for something else or pass on the purchase. Wayne said she would preemptively tell the broker to avoid fossil fuel commercial papers as well.
“Communicating with the broker about our investment — is that not a part of your job?” Spears asked, to which Wayne said yes. “So it’s not like you’re not wasting time doing your job.”
Still, the question remained whether the resolution would limit the city’s ability to bring in the same amount of revenue.
“I just would worry that a broker might see something here that maybe doesn’t align with what you told him, and we’d miss out on something,” Rivenbark said.
Waddell asked for details on the city’s commercial paper investment. The 15% commercial paper investment represents $47 million, Wayne said and added she believed last year’s return on investment was 4%. Thus, the investment brought in around $2 million, and Waddell explained if the fossil fuel resolution axed 10% of that return, the city’s taxpayers would look at a $200,000 loss.
“There is an option of adding more money but there is the chance that we could lose money moving into this,” Waddell said.
Mayor Bill Saffo backed Wayne and her team, noting they have also met expectations and brought in the amount needed, so he didn’t think the proposed fossil fuel change would be a “big deal.”
In Joyner’s view, the resolution is an extension of the city’s climate goals passed years ago.
In 2021, city council established clean energy goals for 2035 and 2050, namely to reduce greenhouse gas emissions from municipal operations by 58% by the year 2050. After starting with a baseline of 9,700 metric tons per year, the city experienced a spike to 12,123 metric tons in 2024, largely due to the purchase of the Skyline Center. Staff are anticipating a significant reduction in emissions as they continue implementing energy efficient infrastructure and sell off surplus property.
The goals are reliant on Duke Energy, which provides the city’s power and has adopted energy goals of its own, like reaching net zero carbon emissions by 2050. Currently, the city’s energy from Duke Energy is 47% clean.
As discussed at the city’s agenda review on Monday, these goals are in jeopardy due to the state legislature’s passage of the Power Bill Reduction Act. The bill was approved by the Republican majority but vetoed by the governor; it has yet to come up for a veto override vote in the North Carolina General Assembly.
Though it keeps the 2050 target, the bill removes the interim 2030 target for 70% carbon reduction and allows for rate increases while a utility’s construction work is in progress. This could delay some of the actions taken to reduce emissions, thus impacting the city’s ability to reach its goals as well.
“Our ability to judge how we’re doing related to our goals is heavily related to energy mixes being provided, and that doesn’t change very quickly,” Public Services Director Dave Mayes said. “So we’ve got time, we’ve got the ability to watch this.”
Reach journalist Brenna Flanagan at brenna@localdailymedia.com.
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