California Lawmakers Pass Bill Mandating Coal Divestment For CalPERS, CalSTRS

California lawmakers on Wednesday passed a climate bill that will force the nation’s two largest pension funds, CalPERS and CalSTRS, to exit coal investments.

The bill, SB-185, gives the funds until mid-2017 to divest. It also prohibits the funds from making new investments in thermal coal companies.

The bill now heads to state Gov. Jerry Brown, who is likely to sign it.

From the Sacramento Bee:

The California Public Employees’ Retirement System and California State Teachers’ Retirement System oversee portfolios worth about $301 billion and $191 billion, respectively. A spokesman for CalPERS said the fund currently invests in between 20 and 30 of the type of thermal coal mining companies covered by Senate Bill 185, with a cumulative value of between $100 million and $200 million. A spokesman for CalSTRS said the fund’s investment portfolio holds approximately $40 million in thermal coal.

Policies combating climate change are preoccupying lawmakers this year. Advocates of SB 185, carried by Senate leader Kevin de León, D-Los Angeles, and passed on a 43-27 vote, argue California should not be lending financial support to the coal industry at a time when the state tries to expand the use of renewable energy.

The bill “aligns our investment policies with our values,” said Assemblyman Rob Bonta, D-Alameda, adding that the bill would not violate pension funds’ fiduciary obligations because “coal is a bad investment.”

[…]

“We need to be concerned about the long-term sustainability of CalPERS and our pension programs,” said Assemblyman James Gallagher, R-Yuba City. “We need to make (investment) decisions based on good, sound financial decisions, not based on emotions.”

Neither CalPERS nor CalSTRS have taken official positions on the bill.

Photo by  Paul Falardeau via Flickr CC License