Caroline Griffith, NEC Executive Director
On January 30, Sen. Lena Gonzalez, joined by Sen. Scott Wiener, and Sen. Henry Stern announced the introduction of SB 252 which would prohibit the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) from investing in fossil fuels and require that they divest any current holding in fossil fuel companies by 2030.
According to a statement put out by Sen. Gonzalez’s office, CalPERS and CalSTRS, which invest the pension funds of state employees and teachers, have an investing power of $469 billion and $327 billion, respectively. Unfortunately, CalPERS estimates that they are currently investing $7.4 billion of these dollars in the 200 largest fossil fuel companies, and CalSTRS is investing in 174 fossil fuel companies with a combined market value of approximately $4.1 billion. Sen. Gonzalez said in a statement, “Our future is a fossil-fuel-free future, and we will no longer put the hard-earned pensions of Californians at risk by investing in a dying industry, and we will no longer wait for corporations to do the bare minimum to protect our planet—we demand meaningful action now.”
California is currently a global leader in climate change policy and has been investing heavily in shifting to renewable energy sources. This bill seeks to end the contradictory practice of moving away from fossil fuels in state policy in response to climate change while still investing pension funds in fossil fuel companies that are the main drivers of climate change. A similar bill was introduced in the last legislative session.
Proponents of the bill also point out that as the state, as well as the country, shift away from fossil fuels, investing in the companies that extract them becomes riskier. According to a study by the Institute for Energy Economics and Financial Analysis, the oil and gas sector is in decline. In 1980, the industry claimed 29 percent of the S&P 500. Today, it only occupies 5.3 percent, the lowest level in more than 40 years. Pension funds have an obligation to remain financially solvent so that the retirees who have also paid into them (in the case of CalPERS and CalSTRS, these are teachers, firefighters and other public employees) can finance their retirement. Investing those dollars in a dying industry is a risky financial investment opposed by many of those pensioners. According to Fossil Free California, an advocacy organization supporting the bill, “an estimated 1,550 institutions representing over $40 trillion in assets have already committed to fossil fuel divestment, including the University of California (UC) System, California State University (CSU) System, California Academy of Sciences, the Episcopal Diocese of California, the State and City of New York, the State of Maine, and the province of Quebec.”
If passed, California would be the third state to divest from fossil fuels, following Maine and New York. You can follow the progress of the bill at leginfo.legislature.ca.gov.