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.