California Senator Formulating Bill to Force CalSTRS, CalPERS to Divest From Coal

California Senate President Kevin de León said Monday he may introduce a bill in 2015 that would require the state’s pension systems – CalPERS and CalSTRS, two of the largest systems in the world – to divest from coal-related investments.

The bill wouldn’t cover oil or gas investments.

The legislation seems to be in its earliest stages.

The move would be a controversial one not just for the fiduciary complications involved. The Center for Retirement Research has done work on the subject of social investing (and divesting) and found that outcomes may not favor pension funds.

More from SF Gate:

The state Senate’s top leader said at an Oakland forum organized by billionaire environmental activist Tom Steyer that he’s planning to introduce a measure next year to require the state’s public-employee pension funds to sell their coal-related investments.

“Climate change is the top priority of the California state Senate,” said Senate President Pro Tem Kevin de León, D-Los Angeles. He said his legislation would require that the California Public Employees Retirement System, which manages public employees’ pensions and health benefits, and the California State Teachers Retirement System divest millions of dollars in coal-related investments.

“Coal is a dirty fossil fuel, and we generate very little electricity in California from coal,” de León said. “And I think our values should shift in California.”

De León, who just returned from an international climate-change summit in Peru, said he hadn’t worked out the specifics of his bill but that it would be limited to coal investments. He said it would not extend to all fossil-fuel holdings such as those in oil and gas production.

“We’re working out all the (divestment) details,” he said. “We’re talking about a way that’s smart and intelligent, not a way that hurts investment strategies.”

Climate-change activists have been pushing large investors to shed their holdings in coal, a major contributor to greenhouse gases. CalPERS, the nation’s largest public pension fund with $300 billion in investments, would be the environmental movement’s biggest prize should de León be able to push his legislation into law.

CalPERS manages $295 billion in assets. CalSTRS manages $187 billion in assets.

Photo by  Paul Falardeau via Flickr CC License