CalPERS

By Sharon Kelly - DeSmog, June 16, 2022

CalPERS says it needs to hold onto billions in fossil fuel shares in order to push polluters in the right direction – but a new report details a pattern of voting against climate proposals.

Does engaging with oil and gas giants by remaining invested in them – keeping a “seat at the table” – help in the fight against climate change? 

A new report suggests not very much – at least judging by the record of the California Public Employees’ Retirement System (CalPERS).

The report by environmental group Fossil Free California takes the public pension fund to task for its results to date, highlighting its history of pushing “the importance of corporate engagement on climate change” in public statements, while simultaneously voting against climate measures in shareholder meetings.

The report details dozens of votes against climate measures by CalPERS this year — including votes against greenhouse gas reduction targets at Royal Dutch Shell, against reporting and reducing greenhouse gas emissions at BP, and against pushing big banks to get in line with international “net zero by 2050” strategies.

In fact, CalPERS has voted against every climate resolution at major American and Canadian banks so far this year, the report claims.

The report also casts doubt on one of the biggest accomplishments of CalPERS’ engagement strategy – the election of several new members to ExxonMobil’s board of directors last year, nominated by the activist investment firm Engine No. 1. The report faults Engine No. 1’s directors for voting against two recent proposals to set greenhouse gas targets that would account for the pollution caused by the fossil fuels ExxonMobil sells, and to produce a report on low-carbon business plans.

“Despite their best efforts, CalPERS and [California’s other major pension fund] CalSTRS have failed to persuade fossil fuel companies to reduce their greenhouse gas emissions, increase their renewable energy production, or transition from fossil fuels to renewable energy,” the report concludes. “By opposing climate proposals at the very companies they claim to influence, the funds’ shareholder activism is not only ineffective – it’s undermining climate action.” 

California lawmakers are currently considering a bill that would spur these pension funds, which invest retirement funds for state employees – including many, like the state’s firefighters, who are today on the front lines of the climate crisis – to drop their investments in fossil fuel producers.

The fund has an estimated $7.4 billion worth of fossil fuel investments that the bill would require them to shed. In April, its board voted to oppose that law, arguing that it would lose its “seat at the table,” only to be replaced by investors that “may not have the same interest in long-term sustainability as CalPERS”..

CalPERS declined comment on Fossil Free California’s new report.

By staff - Fossil Free California, June 2022

As the impacts of climate change begin to wreak havoc on our bisophere, the fossil fuel divestment movement has gained remarkable momentum. Globally, 1,500 institutions representing over $40 trillion in assets have already committed to some level of divestment from the fossil fuel industry.

Despite over a decade of pressure from their members, the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) continue to invest billions in the fossil fuel industry on behalf of their beneficiaries. Studies have shown that if CalPERS and CalSTRS had divested from fossil fuels in 2010, they would have generated an estimated additional $17.4 billion in returns by 2019.23 So why do California’s public pension funds remain invested in the fossil fuel industry?

CalPERS and CalSTRS claim they are engaging with the fossil fuel industry as stakeholders to mitigate climate change by affecting the conduct of oil, gas, and coal companies. However, a review of their 2022 proxy votes reveals that their shareholder engagement efforts are not only ineffective—they’re undermining climate action.

Download a copy of this publication here (PDF).

By Sharon Kelly - DeSmog, May 13, 2022

CalPERS and CalSTRS, which oppose fossil fuel divestment legislation, have “wildly exaggerated” divestment costs, according to Fossil Free California’s latest report.

A newly published report by Fossil Free California finds California’s pension fund managers are circulating divestment “misinformation” by exaggerating the costs involved in shedding their fossil fuel investments in documents prepared for state lawmakers.

California lawmakers are currently considering Senate Bill 1173 (SB-1173), California’s Fossil Fuel Divestment Act, which would require the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS), to stop investing in fossil fuels before the decade is out. The move would impact billions of dollars currently invested in oil, gas, or coal on behalf of California’s teachers, firefighters, and other public employees.

The report titled “Hyperbole in the Hearings” found that the pension “funds have wildly exaggerated losses from past divestments” like those involving tobacco, firearms, and some forms of coal. It concludes that CalPERS and CalSTRS estimates for costs associated with fossil fuel divestment are also exaggerated.

Extraordinary sums of money, invested on behalf of California’s public employees and teachers, are on the line. The two pension funds have estimated holdings of $7.4 billion and $4.1 billion respectively in fossil fuel investments that would need to be divested if the law went into effect. 

It's time to stop using state employees' retirement savings to finance Big Oil.#SB1173 would divest @CalPERS & @CalSTRS from fossil fuels once & for all—but we need your help!

Click here to call, write, or schedule a meeting with your representative: https://t.co/UM5Nr2RCk5 pic.twitter.com/3ogICu0oad

— Climate Safe Pensions Network (@ClimatePensions) May 13, 2022

Resolution Urging Support of SB 1173 (Gonzalez) Fossil Fuel Divestment Act
Adopted by the ILWU NCDC – March 26, 2022

WHEREAS, climate change, through rising sea levels, drought, heat waves, and increased wildfires is already negatively affecting human wellbeing, ecosystems and biodiversity; and 

WHEREAS, climate change is an issue of environmental justice, disproportionately impacting Indigenous communities, communities of color, and low income communities due to historical oppression, inequity of power, and lack of access to resources for prevention and relief; and

WHEREAS, the World Economic Forum recognizes the climate crisis as “a child-rights crisis” and says “the adverse weather events caused by a warming planet affect children first and worst”; and

WHEREAS, an analysis from the Harvard T.H. Chan School of Public Health indicates that the effects of heat, wildfires, storms, floods, and droughts can negatively affect both the physical and mental health of children. The negative effects on children’s physical health from the burning of fossil fuels and climate change include impacts on allergies, asthma, brain development, low birth weight, and preterm birth; and

WHEREAS, the American Academy of Pediatrics recognizes that the physical and mental impacts of climate change “not only directly threaten the lives and safety of children, they put them at risk of mental health problems—and can also cause lasting effects when they destroy their communities and their schools”; and

WHEREAS, a review of the psychological effects of climate change on children finds that “effects of climate change place children at risk of mental health consequences including PTSD, depression, anxiety, phobias, sleep disorders, attachment disorders, and substance abuse. These in turn can lead to problems with emotion regulation, cognition, learning, behavior, language development, and academic performance”; and 

WHEREAS, independent studies by financial consulting firms Blackrock and Meketa found divestment reduces risk, and improves, not weakens, investment returns; and

WHEREAS, a Corporate Knights study found if CalPERS and CalSTRS had divested in 2010 they would have gained $11.9 and $5.5 billion respectively by 2019; and 

WHEREAS, the International Panel on Climate Change concluded in 2018 that we have 12 years to make dramatic cuts in the use of fossil fuels (coal, oil, gas and tar sands) if we are to keep warming to 1.5o C and avoid more catastrophic change; and

WHEREAS, the fossil fuel industry is the single most powerful obstacle to addressing climate change, using their immense lobbying power in Washington D.C. and Sacramento to block climate legislation; and 

WHEREAS, fossil fuel companies' own scientists knew their products were causing climate change, but the companies kept it secret; and 

WHEREAS, to effectively address climate change, most fossil fuel reserves must remain in the ground, never to be used. This makes fossil fuel stocks a risky investment; and

WHEREAS, divestment in specific segments or business operations by CalPERS and CalSTRS is already standard practice and is specifically allowed by the California Constitution; and

WHEREAS, divestment means selling directly held or commingled assets including fossil fuel public equities and corporate bonds; and

WHEREAS, the California Climate Jobs Plan provides a comprehensive roadmap for decarbonization and just transition from a fossil fuel based economy; and

WHEREAS, The ILWU Northern California District Council has endorsed the California Climate Jobs Plan (in February 2022);

THEREFORE LET IT BE RESOLVED, that the ILWU NCDC strongly supports SB 1173 (Gonzalez) the fossil fuel divestment act. And upon passage, a copy of this resolution will be sent to Senator Lena Gonzalez’s office requesting that the ILWU NCDC be listed as an official supporter of the bill.

By staff - Climate Safe Pensions, December 2021

A first-of-its-kind report ... from Climate Safe Pensions Network and Stand.earth reveals that just 14 pension and permanent funds finance fossil fuels to the tune of $81.6 billion.The report shows a comprehensive accounting of the fossil fuel exposure of 14 pension funds in one report from Climate Safe Pensions Network and Stand.earth reveals that just 14 U.S. public pension funds are the quiet culprits of climate chaos: with $81.6 billion invested in coal, oil, and gas.

With over $46 trillion in assets worldwide, pension funds are among the largest institutional investors in fossil fuels. These investments have dangerously underperformed the rest of the market, making public pensions’ fossil fuels investments inherently risky.

Pension funds’ financial influence make them a force to reckon with in the battle to confront, slow and mitigate climate change. Pension fund decision-makers must take climate protection seriously — not only for their financial well-being, but also for the well-being of their millions members.

With 10 years of data, there’s hard evidence that divestment is a winning financial strategy. The fastest way for pensions to address climate change is to divest fossil fuel holdings and invest in just and equitable climate solutions.

Read the text (PDF).

By Sandy Emerson - Unison, September 24, 2021

CalPERS has finally divested from three more thermal coal companies, as required by law. Following the passage of SB 185 (2015) CalPERS divested from all but three (out of 17) selected thermal coal mining companies: Exxaro, Adaro, and Banpu.  In an email to Fossil Free California, CalPERS’ Managing Investment Director Anne Simpson said that CalPERS no longer owns those companies: “As per the earlier board discussion, the three companies were retained for further engagement, which did not make progress hence the sale.”

The divestment from the remaining three thermal coal companies from the 2017 list shows the power of stakeholder pressure. CalPERS re-started engagements with Exxaro, Adaro, and Banpu in October, 2020, after Fossil Free California published its hard-hitting report “CalPERS Continues to Invest in Coal”. At the March 15, 2021 Investment Committee Meeting, Anne Simpson stated that the companies’ responses were being reviewed and that a decision would be announced toward the end of 2021.

We celebrate the fact that FFCA’s letter-writing campaign generated 626 individual letters to CalPERS, after we sent a series of detailed letters to CalPERS executive and investment staff and published the report. This long-awaited divestment success is thanks to the persistence and commitment of pension members, beneficiaries, and concerned Californians who sent letters, made public comments, and generally kept the pressure on for CalPERS to complete its mandated divestment.

By Elizabeth Perry - Work and Climate Change Report, May 27, 2021

May 26 will go down in history as a very bad day for the fossil fuel industry for three reasons: in the Netherlands, the courts issued a landmark decision that requires Royal Dutch Shell to cut its carbon emissions – including Scope 3 emissions – by 45% by 2030. Also on May 26, activist shareholders won separate victories at the corporate annual meetings of ExxonMobil and Chevron. Bill McKibben reflects on all three events in “Big Oil’s Bad Bad Day” in The New Yorker , and Jamie Henn wrote “A Landmark Day in the fight against fossil fuels” in Fossil Free Media.

The case of Royal Dutch Shell is summarized by Friends of the Earth Canada in their press release , which also links to an English-language version of the Court’s decision.

“On May 26, as a result of legal action brought by Friends of the Earth Netherlands (Milieudefensie) together with 17,000 co-plaintiffs and six other organisations the court in The Hague ruled that Shell must reduce its CO2 emissions by 45% within 10 years.

…..“This is a turning point in history. This case is unique because it is the first time a judge has ordered a large polluting company to comply with the Paris Climate Agreement. This ruling may also have major consequences for other big polluters,” says Roger Cox, lawyer for Friends of the Earth Netherlands.

The verdict requires Royal Dutch Shell to reduce its emissions by 45% by the end of 2030. Shell is also responsible for emission from customers and suppliers. There is a threat of human rights violations to the “right to life” and “undisturbed family life”.

German news organization Deutsche Welle offers an excellent, more thorough discussion in “Shell ordered to reduce CO2 emissions in watershed ruling”, which points out that the case was argued on human rights grounds – much like the precedent-setting Urgenda case and the recent German constitutional case. In those cases however, governments were called upon to defend the human right to a future safe from the dangers of climate change. The Shell case is the first time such an argument has been tried against a corporation – and is seen as a harbinger of future legal action.

By Staff - Fossil Free California, March 11, 2021

California Public Employees Retirement System still holds $8.5 million in thermal coal producers in violation of SB 185, a 2015 state law on thermal coal divestment. This act requires CalPERS to divest from companies that earn the majority of their revenue from thermal coal production.

When the fund divested from several coal companies in 2017, it stayed invested in three thermal coal companies that met the criteria—Exxaro, Adaro, and Banpu—because “they had indicated plans to transition their business models to adapt to clean energy generation (such as through a decrease in reliance on thermal coal mining as a revenue source).”

However, four years later, all three of these companies continue to make well over 50% of their revenue from thermal coal (according to data from the Global Coal Exit List at coalexit.org) and show few signs of transitioning their business models. In fact, all of these companies have documented expansion plans for their coal operations. Although South Africa-based Exxaro Resources recently announced that it will not acquire more thermal coal assets, it already owns more than 31 billion tons of recoverable coal, which is more than enough to create a “tipping point” for Earth’s climate.

All three coal companies have demonstrated contempt for the lives of communities displaced or impacted by their mining operations. Exxaro, in South Africa, displaces communities from mining sites in violation of the South African Constitution and with insignificant compensation leaving many communities to struggle to even find necessities like food while their air and water is irreparably poisoned.

Similarly, Adaro, an Indonesian company, strip mines forested land and continues to displace native people, threatening their lives and cultures. Adaro was also responsible for the deaths of 24 children working in mines and continues polluting surrounding areas such that water becomes undrinkable, and farmers have to abandon their land. Finally, Banpu, a Thai company, builds mines across Asia. They use open ponds to collect pollutants which inevitably enter the ground water and destroy crops. Farmers in Thailand reported being forcibly bought out and eventually forced to move because the added cost of purchasing clean water combined with the destruction of their livelihood was too much.

Join Fossil Free California and allies to call on CalPERS to finish its mandated thermal coal divestment by immediately adding Exxaro, Adaro, and Banpu to the thermal coal exclusion list.

Send Letter to CalPERS

By various - unamed CALPers members, February 10, 2021

In order to protect our pension, CalPERS needs to invest in solutions to the climate crisis and a Just Transition to a sustainable future.

What do we mean by a Just Transition? CalPERS must:

• Stop investing in the declining fossil fuel industry and instead Invest in growing and profitable sustainable sectors with well-paying union jobs.
• Unless we ensure that no worker is left behind as we transition to renewable energy, we will have failed the communities that are already harmed the most by fossil fuels.

Fossil Fuels Impact Vulnerable Communities and Workers the Most

• Fossil fuel extraction, refining, and power plants create sacrifice zones where pollution causes higher rates of disease and respiratory illnesses. Communities of color and lower income communities are more likely to live in these areas.
• Climate change contributes to wildfires, drought, coastal flooding, and hurricanes.
• Climate change increases pregnancy risks, particularly for Black mothers.

Fossil Fuels Are Putting Our Pensions at Risk

If you have a pension with CalPERS, you are invested in fossil fuels. $30 billion of CalPERS investments are in the coal/oil/natural gas industry.

• In 2019, CalPERS lost $1 billion on tar sands oil investments alone.
• Fossil fuel investments have been losing money for 10 years, while the S&P 500 as a whole increased in value and outperformed them 2:1.
• Fossil fuel investments are increasingly risky as the world transitions to more available and cheaper renewable energy - solar, wind, geothermal, and hydro.

As fossil fuel companies face dramatic losses, they lay off workers while continuing to pay hefty dividends to shareholders such as CalPERS. That money ought to go instead to a superfund for impacted workers and communities as part of a just transition.

CalPERS Board and staff refuse to divest - but continuing to hold will only ensure more losses, more pollution, and more injustice for workers.

Tell CalPERS to Stop Supporting Climate Chaos:

• Sign the divestment petition at https://fossilfreeca.org/petition.
• Ask your union local to pass a resolution to Divest/Reinvest
• Support a Just Transition for all who are affected by fossil fuels.

Read the text (PDF).

By staff - Fossil Free California, January 25, 2021

Three of New York City’s five pension funds announced they are divesting a total of $4 billion from fossil fuels following a six year campaign led by a multiracial, multigenerational coalition. Pension funds for teachers, school administrators, and civil servants voted to divest from fossil fuels. Police and fire department pension funds have not yet voted to divest. Said NYC Mayor Bill de Blasio, “Divestment is a bold investment in our children and grandchildren, and our planet.” The divestment of the $239 billion NYC pension funds is the largest municipal pension fund divestment to date.

The New York City commitment joins last month’s pledge by NY State Comptroller Tom Di Napoli to divest the $226 billion state Common Retirement Fund from the riskiest fossil fuel companies, and fully decarbonize the portfolio by 2040, a decade earlier than the “net-zero by 2050” pledges made by other funds such as California’s CalPERS.

After a 2018 divestment commitment made by Mayor de Blasio and NYC Comptroller Scott Stringer, a coalition of retirees, youth activists, and union representatives held countless meetings with city officials and staff, scoring interim successes on related projects such as stopping the Williams Pipeline, getting a ban on all new fossil fuel projects in NYC, and doubling NYC investments in climate solutions. Youth and elders from New York Communities for Change, People’s Climate Movement NY, DivestNY, 350NYC, 350.org, and a host of other organizations celebrated every success and focused on growing a stronger and stronger coalition. New York City coupled its 2018 commitment to divest with a string of lawsuits against Big Oil – see “Divest and Sue”.

“It is right and just that, in the midst of the deadly pandemic, our beloved NYC is choosing life over death and acting on its commitment to divest the pension funds from fossil fuel investments,” said Marilyn Vasta, for People’s Climate Movement NY. “For too long we have financially supported the polluters that harm us; it is time to make polluters pay as we invest in a just transition to renewable energy. Although it has taken almost a decade, from small living room meetings to a city-wide cry for divestment, the People’s Climate Movement-NY proudly stands today with Comptroller Stringer and Mayor de Blasio, and applaud them for taking this positive step towards a fossil free future.”

Divestment is a strong remedy for the social and environmental harms caused by continued fossil fuel use and investment, but the urgency of the climate crisis demands this kind of bold climate action. Divestment should be part of every engagement strategy, and it is the best tool for removing climate-related financial risk from a portfolio. 

New York State and New York City are showing us the way: now CalPERS, CalSTRS, and California’s 20 municipal pension funds need to follow suit. To catch a glimpse of some of the New York climate activists that made this victory possible, check out this video of our coalition panel called “Youth and Elders Unite for Climate-Safe Pensions” that aired during last summer’s “Earth Day Live”.