process would be 1 basis point. >> 100 basis points for 100% and roughly $33,000. >> that's correct. >> how much cost? >> less than a basis point to implement. and in terms of the new portfolio versus the old portfolio what would be the funding, no. 1 and no. 2 if you can give us an indication of how much dollar amount in oil stocks you will be selling to maintaining the free index? >> i have not given much thought to sourcing. we have just received the annual contribution from the city. so the funding would likely come

from cash at this point. energy stocks on average between 14-16% of the smp 500. >> now, 14%. i thought last time i heard it was $2 million when i asked the question last time. you would be selling $2 million in stocks to fund a $100 million account. now you are saying it would be about $14 million, is $14 million worth of stocks to fund this account. >> yes, that sounds correct given that i believe exxon mobil 2.5%. and plus all the other energy stocks you are going to get 14-16%. >> you are selling about 14% of stocks and $14 million in oil stocks. >> that's correct. we would have to rebound the other names. there will be

more transactions than just that. >> if we do that, will it have any mitigation on global warming if we did this? >> no. the reason is to change global warming, you need to change consumer behavior or company behavior. all the divestment does is change the behaviors. it's either through force or regulation. >> i appreciate that comment because we have heard some passing arguments from the fossil fuel and other people

showing the dangers of global warming and i'm sure it's dangerous to the fossil fuels and contributing to the rising temperatures and our climate to the world but they have not provided a linkage to selling of oil stocks and the world effect. i'm glad to hear your view because i concur with them. i don't see how this is going to in anyway contribute to the lessen of the global warming but it puts stocks in those hands. we are not going to have the same social responsibility standards that we have. that staff position is that it would not help the global warming issue? >> right. that it would change the

process among shareholders and do you that by choice or regulation. >> can i add onto that. i just and -- attended the kennedy conferences on human rights and other issues cht i think one of the big topics there were they had a lot of retirement funds. is that we don't want to lose a seat at the table. so one of the notes there is it's a very quick answer and i'm going away. it's true. we lose the seat at the table if we sell out of those stocks and we just are kind of randomly doing it as an index fund and i don't like that idea. frankly at that

conference i met 4-5 people from europe who came up with some really interesting software and analysis to specifically take out the stocks that they believe in the long run will not be only bad investment, but to the worst offenders. i agree with that. to put $100 million because we want to make a statement. i don't believe it's the right statement. i would like to see from some of these people who have interesting software to move ahead and operate our portfolio and not lose a seat in the future. >> commissioners, i share your concern of the whole array of esg related issues. i can think of 15-20.

>> but ultimately the way you effect company behavior is by the products and services you buy. if you don't buy their products or use their services, you will change their behavior. >> i agree. >> i agree with both commissioner and pass skin jordan. to rehashing it is that one of the points i made several months back is at the end of the day if we are selling fossil fuel stocks, all we are doing is creating an opportunity for buyers. at the end of the day all you are doing is depressing prices and you are not changing anything. by not having a seat at the table, you don't have the ability to influence policy through proxy, through voting. and i think really what we need to do is need to find a way to have some sort of an impact and i don't think this has an impact except for the fact that our

fees go up by a couple hundred thousands of dollars a year and what have we accomplished other than that fees. i think we should table this indefinitely in the esg meets and as a committee they can talk and come back to full board and staff with some directional thought. i think this is somewhat premature and it doesn't accomplish anything. >> any other comments oovment -- >> i second that. >> i'm not sure that is a motion. i feel a motion coming. >> the second question is why

is there one or more. >> there is a possibility that we can divide this between large or small or develop u.s. and non-us. but i wanted to provide the board with the wherewithal to consider that. >> is that because there is fossil fuel all over the world? >> absolutely. >> that might be one way of achieving that. if that's all the fossil fuel >> the reiterate the answer, it would be no. >> i think the premise that fossil fuel is having an impact on our

ecosystem is well-taken. i do. so i buy the argument and again from the fossil fuel folks, i bet there will be some comments on this that moving fossil fuel through alternate energy is the solution to this and this is going to really have an impact on the world economy. to find the solution to find renewables that would have a less of a deleterious effect on the system, i really think that is the long-term solution to this. i want to at least put that here rather than saying we are going back to the drawing board and i think we have an sg committee and we are going to talk about environmental and social and

governance issue. and we should invest in different industries and different investments that will replace fossil fuels. it isn't just gasoline and fuels. if there is no fossil fuels, what are you going to use for it. i majored in chemistry when i was young and it comes back to making products from the fossil fuel. it does. so i think it's not just the pollution in cars many obviously electric and other kinds of ways of moving cars is the answer, but i think we should not forget in terms of the chemical industry and the drugs industry that fossil fuels is the beginning point for all of these products which has not come up in the discussion yet. so again, what i think the

solution is to have replace many for these kinds of things. to follow up on the chiefs comment and i have had various discussions on this and what is not palable is to put a higher cost. it's going to be those things to have an impact on fossil fuels. again, i just wanted to put that on the table in terms of what i see as a future to replace the fossil fuels, the portion that we use. that is the most polluting part such as automobiles etc in favor of renewables in terms of solar and all kinds of things that are not going to deplete the environment. those are my thoughts. >> can i add to 1 minute too. and i think that is helping out. what is kolg -- coming out of the esg

conference, we talked to cambridge and asked them to help us organize 20 of the largest pensions together to come out with one voice and maybe that will be a lot stronger than to have each one of us make these random investments and it really doesn't do anything in the end but to come up with a bulk of money and calpers asked to participate in that. we are all on the same page. i wholeheartedly agree with commissioner mei berger that will happen because monetarily, whatever it is, tesla or these companies will in the end be the better companies to invest in. so unfortunately we all agreed that it becomes a bottom line number. when

microsoft said, we care about human rights. they cared about when in egypt their own company shutdown because monetarily it was a good thing to do we are talking about human rights and workers paid under horrible conditions. it's better to have workers there who can show up everyday and be healthy. the same thing with polluting over fishing. we can't say stop. we have to provide these people with another means in order to live economically. so i'm really attending this and spending time with a lot of experts in the area. we need to be at the table. we need to figure out which companies are going to be ones to invest in that have the next big opportunity and there will be the tar sands and won't make it in

the end. i think bottom line we'll be better for it as a pension fund and we'll have a better return and do it in the right way. >> commissioner, i have google and apple are also looking at building and energy free are gas free cars. i believe boeng is looking at building polyglass for airplanes which will reduce the amount of fuel and i have information on alternative energy. recently the foundation had their 25th anniversary and they are going to bring out the press for the 25th anniversary they invited 700 goats from sooner --

sol dad goat sanctuary instead of lawn mowers. >> they forgot to say how the goats got there. >> and we don't have water anymore so we can't water our lawns. >> is there anymore discussion on this item? >> the issue here is is not just about the environment. that is the no. 1. but we've had information presented to us about the concept of stranded asset that the reason to divest is going to be losing money and brought to us by the members of the public. it's not so much if we have sold last month as the prices went down. that is one of the factors. is that something we have to pay attention to or not and how we reach our rate of return. will that help us do that today as

mentioned to esg friendly public policy, probably not but long-term we have to talk about not just the environment but how are we going to achieve a solid rate of return with companies with sustainability. today i don't think we are going to be able to solve it by $100 million reallocation. >> by the way, when we talk about guns and ammo and i know we reviewed taking out some of those companies out of the portfolio. it's not smith and wesson but one went under chapter 11. so it's going to happen anyway. >> anybody else. let's go ahead and move to public comment. i have one card from jed holsman.

>> public speaker: that conversation took a very different turn than i was expecting. there are a lot of issues blending together. were you blending together the issue of local investment and clean energy investment and this issue. as far as i'm concerned, that's, i don't think that you actually are confused about those being separate issues. that seems like you are trying to confuse the public. this is not related to divesment. we stopped talking to you about the global warming. the idea that you are talking about global warming like you are experts on the matter and they are talking about it like they are experts on the matter are disingenuous to me

and the public and disingenuous to the meetings that you have had with us personally and publically and everyone watching on the video. i actually cannot believe that i just witnessed you guys having the conversation, after commissioner driscoll pointed out this is about the money in the pension fund. it's actually about the returns and that is what we've been talking about the whole time. that is the data that we've given you. those are the double digit reports that we have given you which apparently have not been read. commissioner mei berger is talking about global warming and clean energy. these are things that we have not talked about since 2013. so what i'm wondering do we hit the reset button every time we leave this room. ultimately this is the third time you heard this issue. this is the third time. the social investment

procedures, specifically call on positive investments as an option to take along with levels 1 and 2. having activated your social investment procedures of fossil fuels. the idea of fossil free investment was proposed by your staff in that vain there is no reason that you can not take action on today. i know i'm passed my time. i will take one more minute. the fossil free index proposed is out performing all other indexes that you have net of fees at the level that you will be investing at. the energy sectors is equally performing group today. it's harder and harder to say you will lose money by divesting or have that conversation instead of discussing how much you are losing by not divesting. >> thank you very much.

>> is there anybody else? >> i would like to say if everybody stopped. people like my daughter. she says i'm an environmentalist but she never wants to give up her car. everybody in this room drives a car. have you driving a muni. only recently the supervisors have been asked to drive a muni. every supervisor says i'm an environmentalist. most people that i call environmentalist are hypocrites because especially in the city they don't ride the muni. that's all i have to say. if you want to be an

environmentalist, ride the muni. >> any other member of the public who would like to comment? >> public speaker: thank you. my name is gary lane. i don't want that last comment to be the last comment. i ride bicycles. all that is besides the point. i point to mr. driscoll's comment and i second what he just told you and all his points. thank

you for your public comment. is there any additional public comment? seeing none, public comment is closed. at this time. >> thank you for that. >> i would move we table this indefinitely and let the esg committee take this up again. >> we have a motion. is there a second? >> can i speak to it? >> i will speak against it. we all know in our heart of hearts that global warming is not going to change. to suggest that is a far cry as a fire in the theatre. we have to be diverse, we have to be broad. at the same time we are leaving a statement in every investment we make. everyone says we are not, but we are. we should

do this fossil free investment. it may not be the statement that we like and it's offset by return, but at the end of day, everything reflects on who we are and how we do business and how our managers look at us. what's missing in this calendar whether it's by error or intention that you forget to talk about returns that were great returns in this index. these are based on money too and what's in front of us doesn't talk about returns whatsoever. the returns that were presented to us at the previous meeting were impressive and i want to remind us we are all favorable to getting to this point. a fact is not out there on a tangent bringing

this. a team was about bringing this. i asked staff to bring us a list of the worst offenders and i promise you i will be making the motion to get the worst offender off and that will refresh your issues of global warming when we start making that statement. i won't be making the statement that the public respond to it. i'm going to make it a statement on how we invest our money, what we represent and how we do it and you better believe reputation counts and what we do and how people see us is is important. i want to make a statement of a fossil free index and i promise you, you will all eventually be here. i maybe the only one here today. >> i think the reason why i

would vote to hold this up and i don't want to hold it up for that long of a time and that is because i was approached by one of the groups or foundations or endowments that there are other ways to look at this issue and supposedly we need to do a little research on and have created programs not specifically just -- index but areas that are better performing than take out the worst companies and find the best companies moving forward to investen. i would like to make sure we are seeing everything before we go to the table and make this vote. i don't think it will be too long. i have

e-mails from four different people. i have e-mails from calpers. let's get this to our staff. at the end of the day if they can't see the performances better from european groups that have been making these investments, i think making the statement is fine. i want to make sure it's the best return way we can do this and i don't think it will take that much time and i would imagine within a couple months you can get this done. >> thank you. >> mr. driscoll? >> the way this recommendation from staff to reallocate $100 million to ex-fossil fuel index i would

consider this symbolic as it remits -- relates to global warming and the rates to this fund. it's symbolic to figure out how to work on the positive side and commissioner has raised the issue. where should we invest, how should we invest. i have a couple of acquaintance that were thrilled they were able to leave china because they were in the area of the coal minus where -- mines where it affected their health. there are a few other funds around the world that are doing things like that. those are what we have to look at and to get a rate of return we are trying to achieve. i would allocate $100 million to ex-fossil free fuel index.

that's why i will vote against the motion and to table it today to start with ideas. >> we've been talking about this issue for a long time. it seems like at this point we've discussed it for over a year. we've asked staff to come back and do a lot of research and come back with a recommendation on the fund and now we are making a you turn on this issue. we need to make a recommendation. i agree there is additional work that needs to be done and butt we need to make a recommendation on it. i don't think we should make an i -- you turn on a recommendation we have made. i agree with it, you would take both companies and individuals together to

make a difference in global warming but you have to start somewhere. we've given you the recommending to go and do the research and it's up to us now to make a difference and make a commitment on $100 million. >> a couple points i want to make regarding risk. it depends on the frame of time you want to look at when you are looking at similar appointments on ex-fossil free. the brutal fact that remains is this, if you sell your oil stocks, you have given up your biggest inflation period. no. 2, minerals and mining. we are giving up a lot of inflation protection by selling our oil stocks. the risk increases, i

see inflation coming back eventually. you can't put a trillion dollars out there and not expect inflation to come back. for those in favor of this, one of the issues you have to reflect upon is is how to deal with all the inflation sensitivity that you are giving up. which is why i'm saying if you can have renewables that can substitute for the fossil fuels that can move in that direction. i think we need to look at the sensitivity with inflation. jed, i talked to you several times and your colleagues about where we would get this back and there is no word whatsoever. going forward i would like to hear a legitimate argument stating how we would