The Press Democrat: California State Senate passes CalPERS/CalSTRS fossil fuel divestment bill
BY MARY CALLAHAN
The California State Senate has passed legislation that would require the state’s two powerful public employee pension funds to stop investing in fossil fuel companies. It would also force them to liquidate close to $15 billion in holdings to aid the nation’s transition to clean energy and reduce greenhouse gas production.
The bill, SB 252, would prohibit the California Public Employees' Retirement System, or CalPERS, and the California State Teachers' Retirement System, or CalSTRS, from making or renewing investments in the 200 largest publicly traded fossil fuel companies beginning Jan. 1
By July 1, 2031, both funds would have to liquidate investments in those 200 companies, which are defined by the carbon content in their proven oil, gas and coal reserves. Because of underground reserves, companies on the list of 200 are deemed to have the most potential for future emissions if enabled by investment capital.
The bill next must be approved by the state Assembly and then signed by Gov. Gavin Newsom. Supporters say they are confident both will happen.
Authored by state Sen. Lena Gonzalez, D-Long Beach, the bill was approved 22-10 on the Senate floor Tuesday, with Senate Majority Leader Mike McGuire, D-Healdsburg, casting his vote in favor of the legislation.
Supporter Miriam Eide, coordinating director of Fossil Free California, said a diverse coalition of supporters, young and old, wrote, called and traveled in person to Sacramento. They urged lawmakers support the bill in an effort to overcome the powerful fossil fuel lobby and the millions of dollars in campaign funds it distributes annually among state lawmakers.
Eide said more than 500 letters supporting the bill were sent to state senators just on Thursday morning, before the vote.
“I feel really excited about the moment that we’re at right now,” she said.
The bill is part of a global movement that seeks to divert investments toward renewable power sources and away from carbon-producing fuels. Nearly 1,600 faith-based, government, educational, philanthropic and other institutions have divested approximately $40.51 trillion from fossil fuel resources, according to the Global Divestment Commitments Database maintained by Stand.earth.
CalPERS and CalSTRS are the two largest, nonfederal public pension funds in the United States, with approximately $467 billion and $311 billion in assets, respectively.
CalPERS serves more than two million retired state workers, as well as some local government workers, public agency personnel and teachers. CalSTRS has about 1 million members and beneficiaries, representing public school educators from prekindergarten through community college.
Divestment proponents include a number of North Bay and Sonoma County education leaders. They say teachers have a moral obligation to do what they can to build a safer future for their students, especially students of color and those in lower income communities that are most likely to be exposed to fossil fuel-related pollution and the consequences of climate change.
Many also say they are concerned that investments in companies with ample reserves pose a threat to their financial security, if the decline of the fossil fuel industry ultimately means those reserves remain in the ground and, thus, of no value.
Many also cite superior gains they believe are possible through fossil-free investing and cite a 2019 study by Corporate Knights, a Toronto-based media firm, that concluded CalSTRS missed out on $5.5 billion it could have generated over the previous 10 years had it excluded fossil fuel companies from its portfolio.
The bill had the verified support of 174 organizations, including the more than 120,000-member California Federation of Teachers, the California Faculty Association and the Faculty Association of California Community Colleges
It was opposed by both CalPERS and CalSTRS, the California Professional Firefighters, the California School Boards Association and the California School Employees Association, along with 13 other organizations on record with the state
But the 310,000 member California Teachers Association never got on board, though many of its local chapters did.
CalPERS and CalSTRS leaders also opposed it, saying they had a responsibility to do whatever was necessary to ensure the greatest security for their members, without restriction.
The bill analysis says CalPERS has indicated divesting as the bill dictates would cost $75 million to $125 million.
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