Will CalSTRS and CalPERS Divest from Fossil Fuels?
Divestment from the fossil fuel industry is a powerful tool to reduce carbon emissions. The traditional energy sector has been losing money for at least the past six years, and recent studies show divestment from fossil fuels is also financially prudent. Fossil Free California is an organization that lobbies the two largest pension funds in the United States, CalSTRS and CalPERS, to encourage them to divest from fossil fuel assets. The offices of both funds are located just across the causeway from Davis.
The California State Teachers Retirement Service (CalSTRS) is the $241.3 billion dollar retirement fund for the public school teachers of our state, the largest teacher retirement fund in the country. Presently, CalSTRS holds over $6 billion (over 2.5% of their portfolio) in fossil fuel assets.
A just-released study by Corporate Knights, a Toronto-based media and analysis firm, returned startling results about the fund. In summary, CalSTRS would have earned $5.5 billion more had it divested from fossil fuels ten years ago, and CalPERS would have gained $11.9 billion more. To put it bluntly, both CalSTRS and CalPERS are losing substantial money by staying invested in fossil fuel companies.
The risks grow as the assets continue to lose value, and it is now irrefutable that the burning of fossil fuels is causing global warming at such an alarming rate that we have a mere 11 years to reverse course or suffer dire and irreversible consequences, according to a 2018 United Nations IPCC report.
CalSTRS has a history of divestment for moral reasons, including divestment from South Africa to end apartheid, and divestment from tobacco products. CalSTRS is in the unique position to usher in an era of renewable energy with some of the same funds that are currently contributing to creating an uninhabitable earth.
Fossil Free California advocates for divestment
For a number of years, the non-profit Fossil Free California has urged CalSTRS board members to consider divesting from its fossil fuel assets. The group has built a website with a wealth of research articles highlighting why they believe divestment is necessary, including tools for individuals to divest their own portfolios and a history of efforts to urge our two California public pension funds to consider divestment. Fossil Free California has also gathered allies, including youth, offered expert information, and provided steady, persuasive testimony to each board meeting for years now. By gathering allies, they have built a movement.
For the last four bi-monthly board meetings, youth from Bay Area groups Earth Guardians and Youth vs Apocalypse have testified during public comment time, urging CalSTRS to consider a future for them by divesting. Youth testimony is not recorded by CalSTRS, although youth speakers come with parental permission letters.
Activists inspire State Treasurer Fiona Ma
At the September 5 CalSTRS meeting, California Treasurer Fiona Ma, who sits on the CalSTRS board, announced her support for divestment. In a press release later, Fiona Ma stated, “Where we invest our money reflects our values, and we should be valuing a clean energy future for California. These brave and passionate students are reminding us of that.”
To add to the body of research likely to be persuasive to the Treasurer, advanced students of Prof. Clair Brown, Professor of Economics and Director of the Center for Work, Technology, and Society at the University of California, Berkeley, have released a well-researched and thoughtful report titled “Analyzing the Financial Risk of Holding Fossil Fuel Assets in CalPERS’ Portfolio,” which further shows how CalPERS’s fossil fuel investments are failing to serve the industry, stockholders, and its beneficiaries.
Local youth speak at November CalSTRS meeting
The November 6 CalSTRS meeting began with an act of civil disobedience by a young protestor from the Bay Area, who stood up and danced as a recording of Greta Thunberg’s speech to the United Nations played loudly: “You have stolen my childhood. … How dare you!” Although a guard tried to escort the youth activist from the room, she was allowed to complete her dance to the entire recording before leaving the room and being ordered to leave the premises.
A number of college students from the UC Davis chapters of the Climate Reality Project and Sunrise Movement also testified at the meeting.
Hannah, a UC Davis student and Sunrise Movement member spoke: “My name is Hannah and I am a third year UCD student studying ecology. My time at UC Davis has taught me that there is no time. Not only did the UN Intergovernmental Panel on Climate Change conclude that we have just 10 precious years to make serious changes, but we have to decrease CO2 emissions by next year. By the time I graduate and can make a difference in my field, it will be too late. We need to take action and do it now. Children in your schools will already face a dramatically different planet than what you had. Let’s not take any more from their future. Divest from fossil fuels and invest in a sustainable Earth.”
Dennis, UC Davis student and Sunrise Movement member made a statement: “If we burn the reserves the fossil fuel companies own, we produce 5 to 6 times more CO2 than we are allowed to emit in order to keep warming below 2 degrees Celsius. We cannot and will not allow that to happen. Although they try to greenwash themselves, these companies don’t want any change. That’s why BP, ExxonMobil, Shell, and Chevron spend a combined $200 million each year for lobbying and much more for think tanks and organizations spreading fake news and denying climate change.
Do you want to fund the spread of false information and the immoral influence on our politicians? Each one of us has taken individual steps to decrease our carbon footprint but we cannot solve this crisis alone. We need you, CalSTRS. The Sunrise Movement Davis asks you to be on the right side of history.”
Megan, UC Davis Junior and Climate Reality Project leader also spoke: “When I was a little girl, we did lockdown drills in school. They scared me, because I was so far from home and my parents weren’t there to protect me. I remember that my 5th grade teacher told us the story of a principal laying his body in front of students to protect them from a shooter. I trusted that my teachers would do anything to protect my right to a future, which I hoped would be full of seeing the beauty of the world, finding a meaningful career, and most of all, having a family.
Now, it’s not a lockdown, it’s climate change. Just like before, my parents can’t protect me. Just like before, I am faced with the fragility of my future. Only this time, it’s not a drill. And this time, I am not sure teachers are willing to protect my right to a safe future.
So, I am asking you to defend the futures of young people like me and those even more vulnerable. Please, divest from fossil fuels. Teachers have always been more than just educators. CalSTRS has been the creator of our safety.”
Six percent of CalPERS fund still in fossil fuel equities
While CalSTRS is the pension fund for teachers, the California Public Employees Retirement Service (CalPERS) is the retirement system for the vast number of public servants in our state. It is the largest retirement fund in the United States with $378.4 billion in assets. As of June 2016, CalPERS held $8.6 billion — equaling 5.92% of their total portfolio — in 142 domestic and international fossil fuel companies or related equities.
CalPERS also has a history of divestment for the social good. CalPERS divested from South Africa to topple apartheid and has also divested from tobacco products. Will they choose to divest from fossil fuel assets? The pressure is increasing for them to do so.
Youth of all ages are committed to attending CalSTRS meetings until the fund divests its fossil fuel assets. Students from the Bay Area, Davis, and Sacramento are considering how to make an impression at the January 29 to 31 series of CalSTRS meetings.
As the market value of fossil fuel equities continues to slide downward, the dangers CalPERS faces are significant, including loss of income, stranded assets, litigation costs, and social costs including the impacts of climate change.
To join the Davis CalSTRS and CalPERS divestment movement, contact Lynne Nittler at firstname.lastname@example.org.
Sources and more reading
Read more about the 2018 study by UCB Economics students:
Read more about Clair Brown, Professor of Economics and Director of the Center for Work, Technology, and Society at the University of California, Berkeley
Read the report: “Analyzing the Financial Risk of Holding Fossil Fuel Assets in CalPERS’ Portfolio https://fossilfreeca.org/wp-content/uploads/2019/06/CalPERS-Fossil-Fuel-Risk-new.pdf
For the full Corporate Knights report:
Listen to the student speakers from Nov 6 CalSTRS meeting:
Read more about Fiona Ma’s reaction to the September 5 CalSTRS meeting speakers: https://fossilfreeca.org/2019/09/10/state-treasurer-fiona-ma-stands-with-teachers-and-youth-at-calstrs/
For pay online news outlet “Pensions & Investments” covered the meeting: https://www.pionline.com/esg/calstrs-faces-calls-divest-fossil-fuel-investments
Learn more about the Nov 6 protest at CalSTRS: https://fossilfreeca.org/2019/11/14/disrupting-business-as-usual-at-calstrs/
Learn if you’re invested in the top 200 carbon producing companies: https://fossilfreefunds.org/carbon-underground-200