Home>Articles>Bill To Force CalPERS, CalSTRS to Divest From Fossil Fuel Companies Dies in Assembly Committee

Assemblyman Jim Cooper. (Photo: Kevin Sanders for California Globe)

Bill To Force CalPERS, CalSTRS to Divest From Fossil Fuel Companies Dies in Assembly Committee

Committee Chairman pulls bill over current financial climate

By Evan Symon, June 23, 2022 4:12 pm

A bill that would have had forced both the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) to divest from fossil fuel companies they have invested in died in the Assembly on Wednesday after it was pulled by the Committee chairman, Assemblyman Jim Cooper (D-Elk Grove).

Sen. Lena Gonzalez. (Photo: sd33.senate.ca.gov)

Senate Bill 1173, authored by Senator Lena Gonzalez (D-Long Beach), would have specifically prohibited both CalPERS and CalSTRS from making new investments or renewing existing investments of public employee retirement funds in fossil fuel companies. According to the bill, all investments in them would be liquidated by July 2030, with a provision that, should the market have a downturn, they can be sold off as late as January 2035 for the right selling conditions

Boards of both funds would also have to file reports to the legislature which would include lists on which companies they liquidated that year and what remained. Filings would have begun in in February 2024. In total, around $9 billion would ultimately be divested from those companies.

Written by Senator Gonzalez as a way to pull free from fossil fuel investing and remove California’s investing role in climate change contribution, SB 1173 did not have an easy path in the legislature. Originally begun as a 350,org project in 2013, fossil fuel divesting from CalPERS and CalSTRS had slowly grown in strength before finally becoming a bill this year. While mainly opposed by Republicans, many Democrats have also called SB 1173 into question, with many abstaining due to huge divestment loss it would bring, especially with the economic downturn and Russian invasion of Ukraine throwing many prices, including of fossil fuels, into chaos.

While divestment are nothing new, with tobacco, coal, Turkish holdings, and Russian holdings all either being divested from or faced a major challenge for divestment from state pension funds in the past several years, divestment from oil would be, by far, the largest yet.

“Usually divestments are seen as more of a political statement rather than ‘the right right thing to do,’ using heavy quotes on the latter,” explained Pryce Stevens, a investment strategist for several 401(k) plans and pension funds, to the Globe on Thursday. “Oil, it is way riskier. For at least the short term they are strong investments with a high dividend rate. Many also have plans to slowly go into green energy to help stay alive, so divesting actually seems like a rash move if they are eventually going to fall in line anyway. You can see why a lot of people are questioning this decision.”

Fierce opposition against SB 1173

In a Senate vote last month, SB 1173 was passed a rare narrow vote of 21-10 with abstentions due to the uncertainty. Groups such as Fossil Free California, who have backed the bill, have noted that a tremendous effort had been given just to get it to this point so far.

“The bill has definitely faced challenges in every single committee or floor hearing,” said Fossil Free California coordinating director Miriam Eide last month. “It’s not been an easy vote to get through,” she said. “It’s taken a lot of work and a lot of mobilizing of our substantial coalition to get the votes all the way through.”

However, the Senate turned out to be the last vote for the bill. Just before the vote on SB 1173 in the Assembly Committee on Public Employment and Retirement on Wednesday, Cooper pulled the bill, citing the current economic situation in the country as a reason to drop the bill.
“At a time when there is so much financial uncertainty and people are struggling to make ends meet, now is not the time to consider political divestment proposals that hurt the financial security of California’s pension systems,” Assemblyman Cooper said in a statement.
Environmental activists were up in arms over the decision, with Fossil Free California calling the decision a “One-man veto and moral failure.” Others against the bill, however, were pleasantly surprised at the outcome.
“Common sense won out,” continued Stevens. “The state is already doing so much for climate change, and will undoubtedly continue to do so, but cooler heads prevailed on this one and agreed that divesting from oil companies would not be very smart. This isn’t an environmental issue. It’s a financial one, one that could significantly hurt the states pension funds.”
“You need to pick your battles carefully in California when it comes to environmental and climate issues, and they obviously picked the right one today. You don’t see victories like this very often. But we’ll see if the empire strikes back.”
Bill supporters on Wednesday noted that they plan to bring similar legislation back next year when the financial and political climate might be more favorable.
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Evan Symon
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3 thoughts on “Bill To Force CalPERS, CalSTRS to Divest From Fossil Fuel Companies Dies in Assembly Committee

    1. Well, CW, I would bet on “the money” winning out over their liberal hate of affordable energy. Here’s why:

      “California’s largest public pensions have significant unfunded liabilities. The largest funds at CalPERS and CalSTRS have reported gaps of more than $138.9 billion and $107.3 billion, respectively, between their estimated obligations to retirees and the current value of their assets.”

  1. Instead of leftist virtue signaling, maybe Senator Lena Gonzalez and her Democrat cronies in the legislature should instead focus on the unfunded CalPERS and CalSTRS pensions that are estimated to be at over a trillion dollars?

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