By RIA ROEBUCK JOSEPH
THE TAXPAYER OF THE CENTER SQUARE
(The Center Square) – California could soon stop investing state pension funds solely to provide financial benefits to its public employees, and instead invest in institutions that align with state policies.
The Fossil Fuel Divestment Act (SB 252), introduced by Senator Lena A. González in January, passed 23-10 on the full Senate on May 25. The bill now goes to the assembly for consideration.
“The bill would prohibit the boards of the Public Employees Retirement System (CalPERS) and the State Teachers Retirement System (CalSTRS) from making new investments or renewing existing investments of public employee retirement funds in a fuel company. fossils,” the legislation stated. .
SB 252 is one of three bills in the Climate Responsibility Package that “aligns public investments with climate goals and raises the bar for corporate action to address the climate crisis.”
“These bills harness the power of the California market to continue the state’s long tradition of setting the gold standard in environmental protection for the nation and the world,” said Senator González. “Despite these forward-thinking actions, California’s multi-billion dollar retirement pension funds are actively investing billions of dollars in the very same fossil fuel companies that are the root cause of climate change.”
If enacted, the bill would require boards to liquidate investments in fossil fuel companies on or before July 1, 2031 and for boards to report to the Legislature and the governor annually beginning February 1, 2025 The reports would include a list of fossil fuel companies from which the council has divested.
The change follows a growing movement toward ESG investing, which looks at a company’s environmental, social and governance standards to determine investment value. Consider the company’s climate policy, how it gives back to the community it serves, its values, and its diversity in leadership.
CalPERS and CalSTRS together have investment power of $469 billion and $327 billion, respectively. The bill uses that investment power to propel companies into climate action. CalPERS invests approximately $7.4 billion in the 200 largest fossil fuel companies. CalSTRS invests in 174 fossil fuel companies with a combined market value of approximately $4.1 billion.
SB 252 will prohibit CalPERS and CalSTRS from making new investments in the top 200 fossil fuel companies, and requires that all current investments be liquidated by 2031. An additional 5-year exit contingency is included, should funds be find in a specific market. conditions.
“The era of fossil fuels is over. Our future lies in climate-safe investments that will protect our planet and our economy,” said Senator González. “The Climate Responsibility Package will help us achieve a fossil fuel-free future by aligning public pension investments with our values and by empowering Californians with the information they need about the companies that are helping advance our climate goals, those that are not and the real financial risks of fossil fuels. I am grateful to my colleagues in the Senate who voted in favor of this bill, and I urge members of the Assembly to help us ensure its success as it moves forward.”
The investment strategies of states appear to have been drawn along party lines rather than market values. While California is actively working to get rid of all things fossil fuels, states like Oklahoma, North Dakota, Texas, Florida, West Virginia, Arkansas, and others have shown resistance to the concept of ESG investing.
“The energy sector is critical to Oklahoma’s economy, provides jobs for our residents and helps fuel economic growth,” said Todd Russ, Oklahoma State Treasurer. “It is essential for us to work with financial institutions that are focused on free market principles and are not bound by social goals that override their fiduciary duties.”
A state law passed last year in Oklahoma bars financial institutions that boycott oil and gas companies from doing business with the state. So far, 13 financial institutions have been barred from doing business with Oklahoma.