pension funds

By Zachary Shahan - Clean Technica, February 9, 2023

California continues to be a climate and cleantech leader. One of its big recent announcements in this regard is that state policymakers have introduced the California Fossil Fuel Divestment Act (SB 252).

Naturally, this divestment move was stimulated by young adults, students. It was then introduced by Senator Scott Wiener (D-San Francisco), Senator Lena Gonzalez (D-Long Beach), and Senator Henry Stern (D-Los Angeles) in the California Senate. The package actually covers a range of topics. It is “a suite of bills that work together to improve transparency, standardize disclosures, align public investments with climate goals, and raise the bar on corporate action to address the climate crisis.”

One of the shocking stats that the parties use to emphasize the importance of this matter and the stunning reality of human-induced global heating is that 71% of greenhouse gas emissions to date have come from just 100 companies. “Without corporate action to reduce these emissions, California would be unable to meet its climate goals,” the state senators surmise. “At a time when rising anti-science sentiment is driving strong pushback against responsible business practices like risk disclosure and ESG investing, these bills leverage the power of California’s market to continue the state’s long tradition of setting the gold standard on environmental protection for the nation and the world.”

By Zara Ashan, Clair Brown, Lena Gonzalez, Eddie Iasaacs, Steve Ongerth, and Carlos Davidson - Fossil Free California, January 31, 2023

By various - Fossil Free California, November 22, 2022

By Nick Cunningham - DeSmog, June 28, 2022

The California legislature was close to passing a bill that would require the state’s two massive pension funds to divest from fossil fuels, but on June 21 the legislation was killed by one Democratic assemblyman who has accepted tens of thousands of dollars in campaign contributions from the energy industry.

Senate Bill 1173 would have required the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS), the two largest public pension funds in the country, to divest from fossil fuels. CalPERS and CalSTRS, which manage pensions for state employees and teachers, together hold more than $9 billion in fossil fuel investments.

The global divestment movement now claims that more than 1,500 institutions have divested from fossil fuels, representing more than $40 trillion in value. New York and Maine have also committed to phasing out fossil fuel investments from their public pensions.

But because of the size of the two California pension funds, their divestment from fossil fuels would be a significant achievement for the global movement. The call comes as the state continues to suffer from long-term drought and catastrophic wildfires that are worsening with climate change. Activists say that the state cannot claim to be a leader on climate action while maintaining billions of dollars’ worth of investments in the fossil fuel industry.

Senate Bill 1173 would have required the pension funds to divest by 2027, and the legislation had the support of the California Faculty Association, the California Federation of Teachers, associations representing higher education faculty, and roughly 150 environmental and activist organizations. 

However, the American Legislative Exchange Council (ALEC), a corporate-backed front group with ties to the oil industry, opposed the bill, warning that divesting from fossil fuels would put public sector pensions in financial jeopardy.

The bill already passed the state senate, and still needed to pass in the state assembly, where Democrats command a large majority. But the bill needed to move through the Committee on Public Employment and Retirement, where Democrat Jim Cooper (Sacramento) is Chairman. 

On June 21, Cooper decided to let the bill die in committee, refusing to even bring it up for a hearing. Environmental groups denounced the “one-man veto.” Cooper has accepted more than $36,000 from the oil industry and other polluters over the past two years, including donations from Chevron and ExxonMobil, according to data compiled by Sierra Club, which called him a “Democratic favorite of the oil and gas industry.” 

“Jim Cooper just decided to continue investing public money in the unequal suffering of my community,” said Lizbeth Ibarra, an activist with Youth vs. Apocalypse, a California-based climate justice organization.

By Brett Wilkins - Common Dreams, June 21, 2022

"This defeat is just a temporary setback," said one campaigner. "We will organize to come back stronger to make our demand for fossil fuel divestment heard because fossil fuel companies are driving us toward unimaginable disaster."

Climate, environmental, and social justice advocates on Tuesday condemned the decision by a Democratic California lawmaker to kill proposed legislation that would require two of the state's leading pension funds to divest from the fossil fuel industry. 

"Today amidst a historic mega-drought, wildfires, and fossil-fueled public health crises, Assemblymember Jim Cooper, Chair of the Assembly Committee on Public Employment and Retirement, refused to allow Senate Bill 1173, California's Fossil Fuel Divestment Act, to be heard in his committee," Fossil Free California said in a statement. "This one-man veto allows the state's pensions to continue to invest billions from public funds into the fossil fuel industry, for now."

S.B. 1173 would have prohibited the California Public Employees' Retirement System (CalPERS) and the California State Teachers' Retirement System (CalSTRS)—the two largest public pension funds in the United States—from making or renewing investments in fossil fuel companies. The measure would also have required the pensions to liquidate their fossil fuel holdings by 2030. The two funds currently hold an estimated $9 billion in fossil fuel investments.

"This decision is a moral failure that disproportionately impacts young people, Indigenous communities, communities of color, and low-income communities," the coalition asserted. "Climate chaos has already cost California billions in damages and health costs from fossil fuel pollution and climate disasters. Jim Cooper, who has just been elected Sacramento County Sheriff, has reported $36,350 in Big Oil campaign contributions from this election season alone."

State Sen. Lena Gonzalez (D-33) said in a statement that "while I am deeply disappointed that my Senate Bill 1173 was not set for a hearing in the Assembly Committee on Public Employment and Retirement this week, I remain committed to the necessary and ongoing fight against the impacts of climate change on our state, and especially those communities in my district that are disproportionately impacted by the negative effects of the climate crisis."

"Teachers and state employees whose retirement futures are invested by our state's pension funds have long demanded that CalPERS and CalSTRS cease investing their money in fossil fuel companies, and this demand will only grow stronger and louder," she continued.

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

By Adam Scott and Patrick DeRochie - Shift Network, May 5, 2022

New analysis finds 80 Canadian pension managers with 124 different roles at 76 fossil fuel companies, raising questions from beneficiaries about fiduciary duty and pension administrators’ potential conflicts of interest on climate-related investment decisions. 

Shift Action for Pension Wealth and Planet Health’s May 2022 report, Canada’s Climate-Conflicted Pension Managers: The Oil and Gas Insiders Overseeing Canadians’ Retirement Savings, reveals the deep entanglement between the fossil fuel industry and directors, trustees and investment managers at Canada’s largest public pension funds. 

The overlap raises serious questions from beneficiaries about their pension administrators’ ability to objectively manage climate-related financial risks and make critical climate-related investment decisions – when the pension administrators are so deeply entangled with an industry whose products are the primary cause of the climate crisis, whose bottom line depends on the continued production of climate-damaging products, and that has a long and ongoing legacy of obstructing efforts to cut carbon pollution.

The analysis finds that among Canada’s ten largest pension funds, which together manage more than $2 trillion in assets:

• 80 different pension directors, trustees, executives and senior staff currently hold or previously held 124 different roles with 76 different fossil fuel companies. 

• This includes nine current pension fund directors or trustees that currently hold 13 roles on the board of directors of 12 different fossil fuel companies, and 56 senior staff or investment managers at pension funds who hold 76 different corporate director roles at 39 different fossil fuel companies. 

• Seven of the ten pension funds have at least one board member who simultaneously sits on the board of a fossil fuel company. 

• In some cases, over a quarter of the pension fund’s board has direct connections to the oil and gas industry.

The best long-term interests of pension fund beneficiaries are not aligned with the financial interests of shareholders of fossil fuel companies. A pension director who is also a corporate director of a fossil fuel company could find themself with real or perceived conflicts of interest between their fiduciary duty to invest in the best long-term interests of pension beneficiaries, and their simultaneous legal obligation to act in the financial interests of the fossil fuel company on whose board they sit.

Press Release

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