By David G. Barry
California’s two
largest public pension funds will not be under pressure to divest from their
fossil fuel investments or Russia.
Bills that would have forced the California Public Employees’ Retirement System
(CalPERS) and the California State Teachers’ Retirement System (CalSTRS) to
divest from more than $11.5 billion of fossil fuel investments by 2030 and from
$1.4 billion in Russia have been shelved.
Assemblyman Jim
Cooper (D-Elk Grove), who leads the Assembly Committee on Public Employment and
Retirement, blocked both proposals from advancing past the committee.
Cooper, who was recently elected sheriff of Sacramento County, said in a
statement that “our hardworking public employees and retirees’ financial future
should not be used as a political football. At a time when there is so much
financial uncertainty and people are struggling to make ends meet, now is not
the time to consider political divestment proposals that hurt the financial
security of California’s pension systems.”
Both CalPERS and CalSTRS had opposed the bills, believing that divestment hurts
investment performance. Other state public pension fund officials had watched
the proceedings in California closely, knowing that approval of such measures –
especially on fossil fuels – could spur other states to take action. Maine last
year became the first state to force its pension fund to divest from fossil
fuels.
Megan White, a CalPERS’ spokesperson, told Markets
Group that the plan does not comment about bills dying in committee.
However, after the fossil fuel divestment bill passed the senate, CalPERS
issued a statement, saying that it “recognizes that climate change poses a material risk to society, the global
economy, and CalPERS’ investments. CalPERS has a strong commitment to the
reduction of fossil fuel emissions. However, as a global investor with a
fiduciary duty to its members and employer partners, CalPERS does not believe
that divestment is an effective solution to this problem.”
The CalPERS board in April voted to “oppose” both that bill as well as the
Russia bill, White said.
As for Russia, CalPERS in another statement said that since February, it has
ceased all transactions in Russian publicly traded equity and stopped making
new investments in the country. It also said it is reviewing its investments in
the country to determine a path forward.
CalSTRS in May
also issued a statement in which the chair of its board, Harry Kelly, said “our
policy is unequivocal that
we oppose bills that force divestment. We all want to get to the same place, to
take powerful action to address climate change. We can do that and ensure a
secure retirement for California’s hard-working teachers through our plan to
leverage our relationships, coalitions and investments.”
Barbara Zumwalt,
a CalSTRS information officer, told Markets Group that CalSTRS “believes climate
change is one of the greatest threats to the future, with undeniable links to
business and financial investments. The vast impacts of climate change threaten
health and safety, our environment and the global economy, which put the
CalSTRS investment portfolio at risk.”
But, she added that the pension plan “is focused on ensuring a secure
retirement for California’s nearly 1 million working and retired public-school
educators. Climate change is about more than fossil fuel companies; our entire
investment portfolio is affected by climate risk. Divesting from fossil fuels
ignores the larger climate change risks to the portfolio. CalSTRS’ approach is
more holistic and includes measuring emissions, engaging directly with
companies, working to expand government policies, and investing in solutions.”
State Sen. Lena
A. Gonzalez (D-Long Beach), who introduced the fossil fuels divestment bill and
saw it pass the Senate last month, said in a statement that she was “deeply
disappointed” that the bill would not receive a committee hearing but remains
“committed to the necessary and ongoing fight
against the impacts of climate change on our state, and especially those
communities in my district that are disproportionately impacted by the negative
effects of the climate crisis. Teachers and state employees whose retirement
futures are invested by our state’s pension funds have long demanded that CalPERS
and CalSTRS cease investing their money in fossil fuel companies, and this
demand will only grow stronger and louder.”
She said she looks forward “to continuing this fight to ensure policy aligns
with our state’s values as a world climate leader, and that we can pass on a
livable planet to future generations.”