In The News

Sac Bee: How California’s pension funds can invest in the future by divesting from fossil fuels

BY LENA GONZALEZ SPECIAL TO THE SACRAMENTO BEE

As the state and economy make the transition to cleaner energy sources to help reach a global goal of zero net emissions by mid-century to stop global warming, a growing number of institutions worldwide are choosing to divest trillions of dollars from fossil fuel companies. This is the ethically and financially responsible choice, and more union members in California are demanding divestment and standing up for climate justice.

The California Faculty Association passed a resolution calling for the California Public Employees Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) to divest from fossil fuels. Their members count on them to make healthy financial decisions about their funds for retirement.

The faculty group was joined in calling for divestment by state associations representing higher education faculty, the academic senates at California State University and the University of California, and local chapters of unions representing teachers in cities from Los Angeles to Oakland. These educators and public employees have made it clear that they do not want their hard-earned pensions to be invested in the destruction of our planet.

Fossil fuel stocks have underperformed for the last five years and are exposed to significant market risks. Looking into the future, the financial risk will be even greater as California and governments around the world continue to commit to more ambitious goals for lowering emissions.

Markets are moving away from fossil fuels and toward carbon-free technologies. It’s increasingly evident that fossil fuels are simply a bad investment. In fact, studies have shown that if CalPERS had divested from fossil fuels in 2010, it would have generated an estimated additional $11.9 billion in returns by 2019.

But the risks go beyond the financial costs of fossil fuel mining and drilling. Fossil fuels also have a disastrous impact on our environment and our health.

From oil spills to land contamination and air pollution, it’s low-income Black and brown communities that suffer the most. In my district, Southeast Los Angeles and Long Beach suffer from high air pollution, public health burdens and social and economic disadvantages. These places have been referred to as “Asthma Alley” and called a “Hot Spot for Polluted Air” by the media.

It’s time to take more expeditious action to protect our vulnerable communities from the harmful effects of fossil fuel pollution. Economic prosperity and a clean environment are not mutually exclusive goals, and that’s where Senate Bill 1173 comes into play.

SB 1173 continues the bold and progressive actions California must take to address climate change. It will prohibit CalPERS and CalSTRS from investing in fossil fuel companies and require that they divest from current investments by 2027.

Among the nation’s largest pension funds, CalPERS and CalSTRS are powerful entities that can help make a difference through their investment power. They have an estimated $469 billion and $327 billion in assets, respectively, and they invest the retirement futures of California’s state and school employees.

California cannot be a climate justice leader if we continue to invest in the companies that are polluting our environment. The data is clear: Fossil fuels are a risky financial investment, and they are furthering the climate crisis.

From South African Apartheid to Big Tobacco, divestment has been proven effective in bringing about change. Let’s do what’s right for our communities and our future: Divest from fossil fuels, starting with state pension funds.

Read the article on the Sacramento Bee website here.