CalPERS Gears Up To Drop Coal

Last week, California Gov. Jerry Brown signed a law requiring the state’s two pension funds to divest from their thermal coal holdings by mid-2017.

That process begins today at a CalPERS board meeting. From the LA Times:

The CalPERS Investment Committee will have a new task at its regular meeting Monday along with its main job of trying to boost flagging investment returns: dumping its coal holdings.

The immediate financial effect of the bill on the funds is negligible. The total CalPERS fund, $293.4 billion as of last week, holds stakes in 24 thermal-coal related companies representing a mere 0.03% of the fund, or about $83 million. CalSTRS said its coal-related holdings are even smaller, about $6.7 million in 11 firms across its $184-billion fund.

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Divestiture will be one of the items on the agenda when Ted Eliopoulos, CalPERS chief investment officer, testifies before the board’s investment committee Monday.

In a statement, CalPERS said it was prepared to implement the law, including a provision that requires that it “constructively engage” with thermal-coal companies to determine whether they are “transitioning their business models to adapt to clean energy generation.”

Finance experts are skeptical of the benefits of using investment policy to advance social goals.

There’s a heated debate over whether divestment actually accomplishes its desired social and economic goals – and, even if it does, if the process is worth the ensuing cost.

One CalPERS consultant, Wilshire Associates, says divestment has cost CalPERS at least $3.8 billion to date.

Photo by  rocor via Flickr CC License