California Senate President

California Bill Would Force CalPERS, CalSTRS To Divest From Coal

California Senate President Kevin de Leon has introduced a bill that would force the state’s pension funds to exit all coal investments.

Additionally, CalSTRS and CalPERS would be prohibited from making new coal investments until 18 months after the bill becomes law.

De Leon hinted in November that he would introduce such a bill, and the pension funds had already responded negatively to the proposal.

More from the Guardian:

The California senate leader, Kevin de Leon, said he was introducing a bill on Tuesday calling on the two state funds – CalPERS, the public employees’ pension fund, and CalSTRS, the teachers’ pension funds, drop all coal holdings.

The bill is part of a larger package of climate measures – endorsed by Governor Jerry Brown – aimed at gearing up California’s efforts to fight climate change.

The former US vice-president and climate champion Al Gore spoke to the CalSTRS board in Sacramento last Friday. Gore has long argued that fossil fuels are a risky proposition as a long-term investment.

“Our state’s largest pension funds also need to keep their eyes on the future,” De Leon, a Democrat, said in an email. “With coal power in retreat, and the value of coal dropping, we should be moving our massive state portfolios to lower carbon investments and focus on the growing clean-energy economy.”

The two state funds are the biggest targets so far of a divestment movement that has moved from college campuses towards mainstream financial conversation.

[…]

De Leon’s proposal calls on managers of both state funds to withdraw from all coal companies, and make no new investments in coal within 18 months after the bill becomes law.

It further calls on the two funds to explore the feasibility of expanding its divestment, by divesting entirely from fossil fuels – including natural gas – and report back to the state legislature by 2017.

CalSTRS and CalPERS have a combined $299 million invested in coal assets, according to de Leon’s office.

Photo by Paul Falardeau via Flickr CC License

CalPERS, CalSTRS Responds To Push For Coal Divestment

California Senate President Kevin de León said on Monday he would introduce a bill in 2015 that would require CalPERS and CalSTRS to divest from coal-related investments.

CalPERS was the first of the funds to publicly respond to the bill. Summarized by Chief Investment Officer magazine:

CalPERS responded strongly to the proposal, stating that “we firmly believe engagement is the first call of action, and results show that it is the most effective form of communicating concerns with the companies we own”.

The statement also detailed CalPERS’ “proven track record” of engaging and dealing with climate change risks within its portfolio. This included CalPERS’ work as a founder member of the Investor Network on Climate Change, and its efforts to persuade governments and policy makers to support a low-carbon future.

“We are also working aggressively with a coalition of 75 international investors worth over $3 trillion in assets to engage with the 45 largest fossil fuel companies to ensure they are taking appropriate action to manage the physical and capital risks associated with climate change,” CalPERS said.

CalSTRS released its own response as well, according to ai-cio.com:

CalSTRS highlighted its review of “sustainable investing and risk management” as well as its plan to triple the value of its investments in clean energy and technology in the next five years. CIO Chris Ailman said at the time the pension could raise its allocation as high as $9.5 billion—5% of the current value of its portfolio.

CalSTRS said climate change was “a material risk assessed across the entire portfolio that could impact current and future investment value”.

“CalSTRS believes our investment decisions must carefully weigh our duty to perform profitably with consideration of environmental, social and governance impact of those investments,” it added. “CalSTRS is a patient, long-term investor, and the ultimate impact of our investment in coal is something that we will be assessing in the coming year.”

CalPERS’ full statement, released on Facebook, can be seen here.

Photo by Paul Falardeau via Flickr CC License

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