Sen. Lena Gonzalez. (Photo: sd33.senate.ca.gov)
Bill To Force CalPERS, CalSTRS Divestment from Fossil Fuel Investments Passes Second Committee
Same bill died in the Legislature last year
By Evan Symon, April 19, 2023 12:34 pm
A bill to phase out fossil fuel investments in the California Public Employees’ Retirement System (CalPERS) and California State Teachers’ Retirement System (CalSTRS) state public pension funds was passed in the Senate Judiciary Committee Wednesday, with the possibility growing that a combined $14.8 billion in fossil fuel investments could be disinvested by the end of the decade if passed.
Senate Bill 252, authored by Senator Lena Gonzalez (D-Long Beach), would specifically prohibit the boards of CalPERS and CalSTRS from making new investments or renewing existing investments of public employee retirement funds in fossil fuel companies. Complete divestment from the companies are due by 2030, with an additional five years being given on top of that in case market conditions aren’t favorable for a divestment for a time. Both boards are also required to file a report with the legislature and the Governor beginning in 2025 on which companies they have divested from in the past year.
Senator Gonzalez authored the bill due to CalPERS and CalSTRS continuing to invest in fossil fuel companies despite California’s continuing actions moving away from fossil fuels and combatting climate change. In a fact sheet released last month, Gonzalez said “Californians, along with states and nations around the globe, are facing the real and immediate threats of climate change and its ever-growing impacts on our health, safety, environment, and our ability to pass on a livable planet to future generations.”
“California has been a world leader in taking steps to combat the causes of climate change, setting historic carbon reduction goals, and taking meaningful actions to help prevent environmental destruction and protect communities who bear the overwhelming brunt of carbon emissions. Despite these forward-thinking actions, California’s multibillion dollar retirement pension funds are actively investing billions of dollars in the very fossil fuel companies that are the primary cause of climate change.”
The Senator also pointed out how much both pension funds currently have invested in fossil fuels. CalPERS, which currently has an investing power of $469 billion, is investing $9.4 billion in fossil fuel companies. Meanwhile CalSTRS, worth $327 billion, currently has $5.4 invested in those companies. Both funds have continued investing in the companies in recent years, having a combined $1.3 billion in Exxon alone, as well as $817 million in Chevron.
Based on these facts, SB 252 has virtually united Democrats, with the bill passing the Senate Labor, Public Employment and Retirement Committee last week by a vote of 4-1 and the Judiciary Committee on Wednesday with all 8 Democratic Senators in favor of it. While Senator Gonzalez’s previous version of the bill, SB 1173, died in the Legislature last year, SB 252 has continued to have strong support so far this year. Environmentalists and others praised the passage on Wednesday, with many noting the strong push against oil and gas companies in recent years.
SB 252 Advances in Senate
“Union members, workers, retirees, and pension members have made it clear: we want out of fossil fuel investments and we want out yesterday,” said Fossil Free California Coordinating Director Miriam Eide on Wednesday. “Fossil fuels are toxic, not only to the financial future of pensions, but to the health of our communities. This vote is a massive testament to the power of unions and the power of Californians when we come together across our differences to unite for our collective future. We are counting on the climate leadership of California’s Senate, Assembly, and Governor Newsom. It’s time for California’s elected officials to listen to unions, working Californians, and constituents – not the fossil fuel lobby. For California and for our public investments, it’s not a matter of if, but when, we go fossil-free.”
However, despite many in favor of the bill, SB 252 continued to have detractors, including many economists and investment companies that warned against hasty disinvesting due to the changing nature of the energy sector.
“Right now, a lot of energy companies, including those heavily into fossil fuels, are looking at major market changes,” economist and energy sector researcher Paul Charlemagne told the Globe Wednesday. “Many are putting resources into green energy, buying firms that will ease the transition from oil and gas to wind and solar, or are offering themselves as an energy provider for the electric car market or as a supplier of lubricants for wind power farms. Look at the largest, Exxon. They’ve been going steadily into green energy for years, and are actually the biggest supplier of lubricants for wind farms. Yet they’re on the chopping block for disinvestment in that Californian bill.”
“The bill looks hasty and is putting every company there in a black and white light, instead of actually looking into each and where they will be in 2030. Will Exxon and some others still be involved in oil production in 2030? Yes. But are they all also seeing where the future is heading and working on advances in those areas as well? Yes too.”
“Plus, current Californian pension investments in fossil fuel companies aren’t actually all that much, and they can easily be invested back into by others. Exxon has a market cap of $437 billion. California slowly pulling out $1.3 billion is really not a big deal when current investors will put that much more in, and then some.
“But the state would be foolish to pass this bill, as is at least, since these companies make money, are still growing, and most importantly, are putting more resources into green energy. I mean, if this passes, a headline could realistically read ‘Governor Newsom signs bill hurting wind power industry’ or something like that. The people behind this bill missed so much.”
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May 26, 2022
A bill to DECREASE returns, where it will INCREASE tax payer liability to fund this pension
These politicians are working for Agenda over People
CalPERS and CalSTRS are already broke with $1 trillion in unfunded liabilities. Divesting from the oil companies won’t hurt much, it will just make them MORE broke than they already are.
So can state employees sue to block this since it interferes with CalPERS duty as a fiduciary entity and attempts to supersede that responsibility via dubiously legal legislation?
Once again the legislature sees a pot of money they don’t control and start attacking it. Figures.
Maybe Democrat Senator Lena Gonzalez is getting some form of payoffs to push this climate change nonsense? Maybe it’s the WEF globalists? Maybe the CCP? Hmmm, who could it be?
No mention who absorbs all investment losses due proven poor ESG investment demands? Funny how that works.
These investment geniuses get to virtue signal, but will still demand taxpayers pay their promised defined benefit pensions in full once they retire. Regardless of their reckless investment demands.
Here is the deal: covert your public pensions to defined-contribution pension plans only, and you can choose to play games with them anyway you want. And you get only what is left over. and not a penny more Taxpayers shall no longer be on the hook to make up for your investment choices.
Pandering a social justice investment scheme, while keeping taxpayers on the hook for all investment deficiencies is economic suicide for the taxpayers. Pure arrogant greed is another term.
We play; you pay. Get lost.
“Union members, workers, retirees, and pension members have made it clear: we want out of fossil fuel investments and we want out yesterday,”….funny. I am a CalPERS member and a former union member and not once has this topic come up. In fact, all of us are pretty pissed off at CalPERS as it is with their insane adherence to ESG which is going to destroy whatever pension we might have actually received. But that’s what this cult does.
I’m sure they’ll be eliminating Apple, Google and Amazon since they all use fossil fuels to make their products!! Or are they just attacking their “enemies”!
Great – more virtue signaling from a California pol who has ZERO awareness of financial management or acting in a fiduciary capacity….
Can we please DOCK their salaries for the waste of California taxpayer’s time and resources???
This is the same as the BDS movement. Next, no investment in anything these incompetent elected people deem offensive. They will ruin the pensions of the workers and foist a greater tax burden on everyone. I would like to know what workers have said they want their pension plan to be divested of fossil fuel companies? People don’t talk about what their pension plan is invested in. They probably don’t even look at the portfolio and holdings. Another lie by democrats? Since when do these corruptocrats listen to the people?
Are they taking requests for what not to be invested in? As always, follow the money and who or what companies sponsored this bill. Someone is going to make money and it probably won’t be the pension plans.