François Vigneault

WELLS FARGO wanted to talk.

It was August 2016, and as Portland inched closer to acting on recommendations that the city cease investing millions in the bank, Wells Fargo executives hoped to stop the process.

The bank's Oregon region president, Tracy Curtis, penned a letter [PDF] to the city's Socially Responsible Investments Committee (SRIC), which was close to formally suggesting Portland add Wells Fargo to its "do-not-buy" list. Another bank employee—a senior vice president based in San Francisco—followed up by email and phone, offering to meet in person.

For advocates of the SRIC, the response was telling. Though corporate divestment campaigns are frequently written off as merely symbolic, SRIC members say Wells Fargo's concern showed it was keen on avoiding the stigma of being listed as a bad actor by a major American city.

Nearly nine months later, the bank might get its wish. Portland's on the verge of ensuring Wells Fargo and others won't have to worry about such public shaming.

In an interesting about-face, the Portland City Council will consider scotching the SRIC, created in late 2014 to help ensure Portland was investing ethically.

Instead, Mayor Ted Wheeler is proposing moving the city's do-not-buy list behind closed doors. Wheeler and Treasurer Jennifer Cooperman want to move away from the SRIC's public hearings, and instead employ a secretive ratings system that ensures Portlanders have little idea which companies have been blacklisted.

For people who support the SRIC process, the proposal defeats the purpose.

"It's not about the financial impact," says Hyung Nam, a Portland high school teacher and SRIC member. "It's about the public image that these corporations care about so much."

Portland is required by state law to adopt an investment policy each year, but the pronounced changes being pushed this time reflect a central conflict in how that policy should be carried out.

On one hand, officials like Wheeler—the former Oregon state treasurer—and Cooperman think of investments largely in terms of reaping maximum returns, feeling that's a responsible use of public money.

Asked about divestment policies late last year, a spokesperson for Wheeler said they are "not typically center-of-target."

On the other hand, some groups believe the city should be making a statement with the roughly $1.5 billion it invests, and refuse to do business with companies that behave shabbily.

Doing so publicly can at times make officials uncomfortable. Last year, in its first major report, the SRIC recommended the city put nine additional companies on its do-not-buy list, which already included Walmart and fossil fuel companies.

Wells Fargo was singled out partly for its role helping finance private prison companies. Caterpillar, the most contentious recommendation, was listed partly because its bulldozers are used to raze homes in the West Bank. Amazon was also included the report, as were Nestlé and a number of banks.

But City Council waffled, with even then-Commissioner Steve Novick, who'd pushed the creation of the SRIC, voicing concern about the scope of the committee's recommendations.

Instead of voting on adding specific companies to the do-not-buy list, commissioners instead placated the audience by electing not to purchase bonds from any corporation until this year, after the city had adopted its latest investment policy.

Activist groups claimed victory, but the proposal that's surfaced under Wheeler has inspired disdain.

"The mayor's investment policy backslides from a system that city council did not give a chance to work, and replaces it with an undemocratic, secretive process," says Jamie Trinkle of the group Enlace, which has pushed heavily for divestment from private prison companies. "This is not in line with the city's values and its unanimous support of becoming a sanctuary city, of supporting fossil fuel divestment, of asserting support for Standing Rock."

Wheeler's proposal is to use a system from New York-based firm MSCI that rates corporations on their "environmental, social, and governance-related business practices" (ESG for short). Portland spends $37,500 a year to subscribe to the ratings service, and agrees to keep the data secret.

"The contract obligates the City to not disclose MSCI's detailed ESG methodology or individual company ESG-ratings," reads a memo Cooperman wrote in February.

Under the proposal, the City of Portland would only be allowed to invest in companies that meet MCSI's middle-of-the-road "BBB" rating or higher. According to Cooperman, using that baseline would allow Portland a pool of roughly 24 companies it could invest in. (Walmart and fossil fuel companies would still be explicitly off limits.)

What are those companies? The city won't say. Even when the Mercury asked for a list divorced completely from companies' ratings, the city refused, saying that MCSI "confirmed they would consider the requested information proprietary as the ratings are their intellectual property." 

Activists aren't just worried about this secrecy. They've suggested the policy could flout state law by giving undue influence over investments to a private firm. And they're worried that the ratings system doesn't consider issues properly, being more concerned with how corporate actions might affect a company's bottom line than society at large.

Nam points to a 2015 rating from MSCI on Wells Fargo [PDF]—which is supposed to be secret, but which he says he found posted publicly on the company's site. It lists 14 factors MSCI could theoretically take into account for the rating. But as Nam points out, the document gives no weight to three you'd think would be biggies: "carbon emissions," "labor management," and "business and ethics fraud."

The result? Wells Fargo earned a "B" rating in 2015, too low to be considered under the plan the city is considering.

Then again, the rating might have changed since then. There's no way to know.