The Press Democrat: New state senate bill would force CalPERS, CalSTRS to divest from major fossil fuel holdings
February 17, 2022
By MARY CALLAHAN
California’s two powerful public employee pension funds would be required to withdraw their investments from fossil fuel companies to help fight climate change under a state Senate bill introduced Thursday.
Authored by Sen. Lena A. Gonzalez, D-Long Beach, and co-sponsored by Sen. Scott Wiener, D-San Francisco, the legislation would give the California Public Employees' Retirement System and the California State Teachers' Retirement System until July 2027 to divest a combined $9.9 billion from the Carbon Underground 200 — a list of companies considered to have the greatest potential for future emissions from their coal, oil and gas reserves.
The bill also would prohibit any new investments in those companies.
During a virtual news conference Thursday, Gonzalez said the bill would help leverage the earnings of nearly 3 million active and retired public schoolteachers, college instructors, state and local employees in the effort to draw down greenhouse gas emissions and prevent the worst effects of climate change.
It also would align the pension fund’s investment strategy with the state’s own, large-scale effort to slow and mitigate global warming. That strategy involves the investment of billions of dollars on clean energy and transportation, climate mitigation and environmental equity, drought response, forest health and wildfire prevention.
“While California has taken a leading role on the world stage in advancing landmark and far-reaching policy and budget solutions to fight climate change, we are also unfortunately faced with the contradictory and incongruent fact that our state’s two largest employee pension funds use their enormous investment power to finance the very companies that are driving climate change,” Gonzalez said.
CalPERS and CalSTRS are the two largest, non-federal public pension funds in the United States, with approximately $469 billion and $327 billion in assets, respectively.
About 1,500 institutional investors from around the globe, with assets approaching $40 trillion, have pledged to divest their fossil fuel holdings, according to 350.org and stand.earth. They include everyone from Queen Elizabeth and Harvard University to the Episcopal Church and New York City.
Proponents, including many local teachers and members of CalSTRS who are active in the divestment campaign, say they feel a moral obligation to ensure their earnings are not directly capitalizing fossil fuel companies, financing lobbying efforts or lending them political legitimacy.
Many also worry that the value of those financial holdings could plummet in a changing environmental and investment landscape.
“The sooner we divest, the less of a hit we’ll take — CalSTRS that is,” Taylor Mountain Elementary School teacher Tiffany Kampmann said last fall.
Despite internal and external pressure, leaders of both California public pension funds have refused to change positions, citing their obligations to ensure sufficient returns to provide financial security to their retirees.