California Gov. Signs Bill Mandating Coal Divestment for CalPERS, CalSTRS

California Gov. Jerry Brown on Thursday signed SB 185 into law; the measure forces the two state pension funds – CalSTRS and CalPERS – to begin selling their stakes in companies that earn a majority of their revenue from coal mining.

The funds have until July 1, 2017 to divest entirely from such companies.

More from the LA Times:

The new law will affect $58 million held by the California Public Employees’ Retirement System and $6.7 million in the California State Teachers Retirement System, a tiny fraction of their overall investments. The funds are responsible for providing benefits to more than 2.5 million current and retired employees.

De León pitched the measure as a way to emphasize more secure, environmentally friendly investments.

“Coal is a losing bet for California retirees and it’s also incredibly harmful to our health and the health of our environment,” he said in a statement.

Pension360 has previously covered the measure here.

CalPERS and CalSTRS officials never took an official stance on this particular bill, but past comments show the funds question the effectiveness of divestment.

CalSTRS CIO Chris Ailman said in April:

“I’ve been involved in five divestments for our fund. All five of them we’ve lost money, and all five of them have not brought about social change.”

CalPERS CEO Anne Stausboll expressed this sentiment in March:

“Engagement is the first call of action and is the most effective form of communicating concerns with the companies in which we invest. That is why, when it comes to climate change and its risks, Calpers’ view is that the path to change lies in engaging energy companies, instead of divesting them. If we sell our shares then we lose our ability as shareowners to influence companies to act responsibly.”

Read SB-185 in full here.