pension funds

By Elizabeth Perry - Work and Climate Change Report, March 18, 2021

Chasing Carbon Unicorns: The Deception of Carbon Markets and

Divesting to protect our pensions and the planet: An analysis of local government investments in coal, oil and gas was released in February by Platform, Friends of the Earth Scotland and Friends of the Earth England Wales and Northern Ireland.

The report details the extent of fossil fuel investment by local governments in the U.K., and their progress in divestment. However, of broader interest, it summarizes the financial status of the declining fossil fuel industry, explains the process which lead to stranded assets, and describes the financial dangers for all pension funds in quite understandable terms: “pension funds exposed to the fossil fuel system in the coming decade will face a rollercoaster ride of disruption, write-downs, financial instability and share price deratings as markets adjust.” In an explanation very relevant to Canadians, whose own Canadian Pension Plan Investment Board still clings to the “staying invested and ‘engaging’” approach – the report uses the example of investing in Blockbuster videos vs. Netflix, to debunk the “engagement” approach: “The argument for ‘engagement’ tends to be one made by asset owners who employ investment managers who won’t or can’t accept that there is a technology-driven transition occurring. …. this approach of ‘we’ll decarbonise when markets decide to decarbonise’ is clearly not a risk management strategy. It is a ‘do nothing, and hope a few meetings will help’ strategy.”

Divesting to protect our pensions and the planet offers practical steps for local councillors, community members, and labour unionists. For unions, it points to the leadership of the Trades Union Congress (TUC), which passed a climate action motion in 2017 which included support for divestment, based on a motion by their constituent unions representing food workers, communication workers, fire brigades, train drivers, and other transport workers. Unison, the primary union representing U.K. government workers, also passed a strong divestment motion in 2017 – meaningful because in the U.K., union members in government workplaces are usually entitled to some form of representation on their pension fund committee and board. The report urges union members to become knowledgeable about financial issues and to speak up in committee meetings – advocating for divestment and re-investment in lower-carbon, socially just funds which benefit their local communities and economies, especially after Covid. The report cites inspiring examples, such as investment in wind farms by Manchester and London Councils, the U.K.’s first community-owned solar power cooperative by Lancashire County Council, and social housing in the Forth Valley and in London Councils.

An earlier guide for unions was Our Pensions, Our Communities, Our Planet: How to reinvest our pensions for our good? published by the Trade Union Group within Campaign against Climate Change. The 6-page, action-oriented fact sheet lacks all the up-to-date statistical detail in Divesting to protect our pensions and the planet but makes many of the same arguments for divestment, and includes links to U.K. resources, as well as a model motion for local unions.

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 Elizabeth Perry - Work and Climate Change Report, February 22, 2021

With the goal to leverage their collective financial clout, Canadian university endowment funds and pension plans launched the University Network for Investor Engagement (UNIE) on February 18. Working through SHARE, Canada’s leading not-for-profit in responsible investment services, “The UNIE initiative will focus on key sectors where advocacy can make the biggest difference, including finance, transportation, energy and utilities, and manufacturing, focusing both on reducing greenhouse gas emissions and accelerating the transition to a low carbon economy.” Initial participants include Carleton University, Concordia University, McGill University, McMaster University, Mount Alison University, Université de Montreal, University of St. Michael’s College, University of Toronto Asset Management, University of Victoria, and York University.

This development follows on a number of statements and initiatives by Canadian pension administrators – most of which reflect this general strategy to prefer engagement as shareholders over divestment from fossil fuel holdings. Some examples:

In November 2020, the CEOs of Canada’s eight major pension administrators, with approximately $1.6 trillion in assets under management, issued a press release announcing their joint position statement, Companies and investors must put sustainability and inclusive growth at the centre of economic recovery. The text calls on companies to provide consistent and complete environmental, social, and governance (ESG) information, and continues: “For our part, we continue to strengthen our own ESG disclosure and integration practices, and allocate capital to investments best placed to deliver long-term sustainable value creation.” The signatories included: AIMCo, BCI, Caisse de dépôt et placement du Québec, CPP Investments, HOOPP, OMERS, Ontario Teachers’ Pension Plan, and PSP Investments.

“Why are Ontario pensioners investing in future Alberta stranded assets?” (in Corporate Knights, December 16, 2020) describes investment by OP Trust (which holds the pension funds of Ontario civil servants, teachers and healthcare workers) in a natural gas electricity-generation plant in Alberta. The authors summarize the growing global realization that fossil fuel investments are financially risky and conclude, “The people at OPTrust have begun to recognize this. They’ve created multiple reports, with pretty graphs and rosy statements about supporting the Paris Agreement. But this statement rings out: “Emission reduction targets are not today’s objective.” Like many other organizations, they are unwilling to walk the talk.”

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”.

By Staff - Labor Network for Sustainability, January 2021

New York State Comptroller Tom DiNapoli has announced that New York State’s Common Retirement Fund, valued at over $226 billion, will decarbonize by 2040. The plan includes interim trajectory goals, rigorous reporting, staff hiring, and transparency.

New York State is the largest pension fund in the world to take this kind of bold and comprehensive climate action. The announcement follows an eight-year campaign by #DivestNY, a coalition of more than 40 different groups.

Nancy Romer, chair of the environmental justice working group of Professional Staff Congress-City University of New York(CUNY)/American Federation of Teachers 2334, representing 30,000 faculty and professional staff at CUNY, says, “As state workers, we stand in solidarity with other state workers who can rest assured that their hard-earned pension funds will be protected from the failing fossil fuel sector of our economy and from the destructive effects it has on our planet’s climate.” Doug Bullock, a state pensioner and Albany County Central Federation of Labor first Vice President, says:

I urge the members and leadership of my union the Public Employees Federation and CSEA (Civil Service Employees Association) and NYSUT (New York State United Teachers) to support “decarbonize the NYS Pension Fund” which includes divesting from fossil fuel corporations and is a major step forward by Comptroller DiNapoli. This divestment will be converted to investing in renewable and sustainable energy sources, making our fund more fiscally responsible and valuable during the climate change crisis. The Albany County Central Federation of Labor passed a resolution supporting divestment in fossil fuels as did the Troy Area Labor Council (TALC). As First Vice President of ACCFL and Delegate to TALC, I urge the entire labor movement to decarbonize pension funds.”

DivestNY and Local unions in NYSUT are now calling for fossil fuel divestment from the New York State Teachers Retirement System as a next step.

By Staff - Fossil Free, December 9, 2020

New York — Today, New York State Comptroller Tom DiNapoli announced that the $226 billion New York State Common Retirement Fund (Fund) is moving to divest from the riskiest oil and gas companies by 2025 and decarbonize by 2040. 

New York’s announcement is the biggest leap forward worldwide on climate finance action in 2020, an otherwise bleak year for the planet. It creates the most comprehensive program of any large public fund worldwide to divest from fossil fuels, decarbonize across a massive portfolio, and put major financial pressure on public companies — from auto companies to utilities — to align their operations with the scale of climate action needed to stave off worldwide catastrophe.

The victory comes eight years after New Yorkers launched the #DivestNY campaign, days ahead of the December 12 fifth anniversary of the Paris climate accord signing, and sets the bar for climate finance action ahead of COP26 next year in Scotland.

Comptroller DiNapoli is taking a ground-breaking, systematic approach to reviewing and assessing each fossil fuel company sub-sector, with a process grounded in fiduciary responsibility. The results of the first review, targeting the coal sub-sector and completed earlier this year, resulted in divestment from 22 coal companies. Similar divestment action is anticipated from the current tar sands review, which is set to conclude next month. After the tar sands review, the Comptroller will review fracking companies,Oil majors, fossil fuel service companies, and oil and gas transportation and pipelines. All reviews and divestment actions will be completed by 2025.

Just like New York City’s 2018 announcement of a five-year plan to divest its massive pension funds from fossil fuels, today’s announcement by Comptroller DiNapoli will reverberate globally, boosting divestment and climate finance campaigns across the nation and around the world. The commitment to decarbonize the Fund by 2040 is ten years sooner than any other US pension fund. This plan also includes interim trajectory goals, rigorous reporting, staff hiring, and transparency. 

NYS-CRF historically has held over $12 billion in fossil fuels, including more than $1 billion invested in ExxonMobil alone. Divestment will ensure that the NYS fund will end such financing. 

To celebrate this victory and encourage funds across the country and around the world to take similar action, the multiracial, multi-generational #DivestNY coalition is hosting a virtual press conference and rally at 10amEST today, featuring youth activists, pensioners, financial experts, and academics, along with Bill McKibben, New York State Senator Liz Krueger, and Assemblymember Felix Ortiz. The legislators co-prime sponsored divestment legislation and pushed for such historic action.

The #DivestNY coalition, composed of 40+ groups, won this campaign through focused and diligent campaigning over many years. The campaign demand launched after Superstorm Sandy devastated the Northeast in 2012, costing nearly $70 billion in damages.

In the face of COVID-19, the coalition shifted into virtual campaigning and video conference advocacy and lobbying, escalating momentum toward this victory. In September, 1100+ Academics sent a letter to Comptroller DiNapoli urging him to divest from fossil fuels. To date, over 1300 institutions representing more than $14 trillion in assets have committed to some level of fossil fuel divestment.

Today’s announcement also builds momentum for activists and experts to convince the $120 billion New York State Teachers’ pension fund to divest. The #DivestNY coalition will continue to work alongside Comptroller DiNapoli, the expanding team at the Comptroller’s office working on climate finance, and public officials at all levels to ensure this commitment, its benchmarks, and a fossil free world become reality.

By Ryan Schleeter, Amy Moas, Ph.D., and Tim Donaghy, Ph.D. - Greenpeace, November 17, 2020

The economy we have today works for the 1%, not the 99%. The devastation wrought by COVID-19 in the United States—the death, anxiety, isolation, and instability—is the direct result of a system designed to concentrate power in the hands of a few. People are suffering and dying not only because of the virus, but because of the longstanding inequality and racism it has laid bare. This is the same system that has landed us in a climate and extinction crisis in which our very life support system—our planet—is under attack.

As we chart the course toward recovery, we must also confront these social, environmental, and economic injustices at their roots. The centuries-long era of racial capitalism[1]—the system under which wealthy white elites and massive corporations have controlled and exploited land, communities, and cultures to acquire power—must end.

Going back to normal is not an option. The past was not only unjust and inequitable, it was unstable. What we knew as “normal” was a crisis. We must reimagine the systems our country is built on from the ground up. We envision a world where everyone has a good life, where our fundamental needs are met, and where people everywhere have what they need to thrive.

Read the text (PDF).

By Cynthia A. Williams - Canada Climate Law Initiative, September 2020

By Robert Dam and Vanessa Warheit - Fossil Free California, September 2020

This 14-page report shows that CalPERS continues to hold millions in coal producers that make the majority of their revenue from thermal coal. In fact, CalPERS even increased its investments in Exxaro, a company that qualified for divestment in 2017 but was retained by CalPERS because they said they were investing more in green energy. But Exxaro’s modest clean energy initiatives are dwarfed by its current coal operations in South Africa, and by its intent to seek permits for a six-fold expansion of its coal mining, which could be a tipping point for the climate.

In recognition of coal’s outsized contribution to human-caused climate change, in 2015 California passed a law – SB 185 – requiring CalPERS and CalSTRS to divest from companies making 50% or more of their revenue from the mining of thermal coal.  A 50% share of revenue sets a very high bar that can be reached by only the small number of “pure-play” coal mining companies that remain in business.  Many investors, including BlackRock and the State of New York, define a “coal company” with a much lower threshold of 25% or even 10%.

If CalPERS coal holdings are analyzed more broadly, using the criteria of the Global Coal Exit List, it’s clear that CalPERS holds billions in coal – coal mining companies, coal-fired utilities, coal distribution and services, and large diversified companies with substantial coal operations. Instead of winding down its investments in coal, which was the intent of SB 185, CalPERS actually increased investments in coal by $1.5 billion dollars between 2018 and 2019, for a total of $6.5 billion throughout the whole coal value chain. 

CalPERS’ coal exclusion policy is weak compared to those of many other institutional investors. By failing to set a strong coal exclusion policy, CalPERS has already lost billions in absolute value on its coal investments, and the sector continues to decline. As New York State’s Tom DiNapoli said when he decided to divest 22 thermal coal companies, “After a thorough assessment, the fund has divested from 22 thermal coal mining companies that are not prepared to thrive, or even survive, in the low-carbon economy.”

Download (PDF).