Report: Fossil Fuel Investments Cost California Pension Funds Money
Tuesday, November 5, 2019
Photo by Charlie Riedel AP
California activists hope a new study powers their bid to get the state’s second-largest pension system to divest from fossil fuel stocks.
Fossil Free California says it makes financial sense for the state’s teacher retirement fund to move its investments out of fossil fuel companies.
An accounting firm’s review of the $239 billion fund found CalSTRS , California State Teachers' Retirement System, could have made $5.5 billion more between 2009 and 2019 without fossil fuel investments, according to the study.
The review was a quarter by quarter analysis that assumed the money currently invested in fossil fuels was equally spread out among the rest of the fund’s portfolio.
Activist Sandy Emerson is pushing for the fund to divest.
“I know that CalSTRS is a very thoughtful investment board and that they are taking in this information. It remains to be seen if they are able to act,” said Sandy Emerson, Fossil Free California’s treasurer.
CalSTRS officials released a written statement that acknowledged the risks facing the fund, but pension fund officials said it is important to stay engaged.
“CalSTRS recognizes climate change poses risks to our portfolio and is implementing a low-carbon transition work plan that builds on CalSTRS’ 15 years of work on climate-risk mitigation strategies. By engaging with policymakers and companies, and analyzing a broad range of research and data, CalSTRS will manage climate risk and find the best investments that help deliver climate solutions. These practices will also deliver the returns we need to pay promised benefits. CalSTRS doesn’t base investment decisions on short-term trends. CalSTRS’ investment goals are long-term and strategic, and we invest over a decades-long horizon to fund pensions far into the future.”
That line of reasoning does not sit well with Fossil Free California.
“The funds seem to insist on staying invested in order to engage with the companies,” Emerson said. “And engaging with fossil fuel companies is not a guarantee of anything. You cannot ask the fossil fuel companies to change their core business.”
The University of California system recently committed to divesting and California recently passed a new law requiring pension funds to consider climate impacts as investment decisions are made.
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