Last Updated on June 11, 2023 by BVN
Aryana Noroozi
If passed in the California Assembly this summer and signed by Gov. Gavin Newsom, Senate Bill 252 will prohibit California teachers’ pension funds, with CalSTRS and CalPERS retirement plans, from making new investments in fossil fuel companies.
California State Teachers’ Retirement System (CalSTRS), is the largest teachers’ retirement system and second largest public pension fund in the nation. California Public Employees Retirement System (CalPERS) is the largest public pension fund in the U.S.
The legislation, introduced by Sen. Lena Gonzalez (D-Long Beach) would go into effect starting in 2024 and all current investments would need to be discontinued by 2031.
The bill’s efforts lie in minimizing the capital that fossil fuel companies will have to rapidly begin new projects and push legislation supporting fossil fuel energy production. Recently, fossil fuel companies spent over $20 million to lobby against California legislation to implement strict pollution controls and develop response plans to protect the health of frontline communities, including those living within 3,200 feet of existing oil wells.
Fossil Free California estimates that combined state pensions have $44.2 billion invested in fossil fuel companies along with fossil fuel support companies, pipelines, and gas and coal-fired electric utilities.
Of public pension money invested in the top 200 coal, oil and gas production companies, California’s funds account for two percent. CalPERS, who in a statement opposing SB 252, said that as of December 31, 2022, “the estimated value of publicly traded securities held by CalPERS that meet the SB 252 criteria of a ‘fossil fuel company’ was $9.4 billion.”
Additionally, CalSTRS reported $5.4 billion of fossil fuel related holdings within their retirement plan. They published their opposition in a bill analysis and noted that “the risks associated with climate change cannot simply be divested away.” The agency also maintained that by requiring divestment, the bill would “ignore CalSTRS’ exposure to the broader economy and undermine efforts to reduce emissions and transition to a low-carbon world.” CalSTRS reported that their retirement plan currently holds investments in 159 of the top 200 fossil fuel companies.
On the other hand, many labor groups whose members have retirements within these pension plans do support fossil fuel divestment, including the United Teachers Los Angeles, the California Federation of Teachers, the California Faculty Association and the Faculty Association of the California Community Colleges.
“It is an unacceptable moral failing that California’s public funds go to the fossil fuel industry, which contributes to public health harms that kill hundreds of thousands of people in the U.S. each year and disproportionately endanger Black, brown, Indigenous and poor communities,” said Jane Vosburg, CalSTRS retiree and board chair of Fossil Free California.
“We owe it to our teachers, students, union members, and the cities and communities of California to stop investing in dirty fossil fuel funds that can become stranded assets. It’s time to future-proof our pension funds,” she said.