CalPERS buys more time to "study" tobacco reinvestment — and its commitment to social responsibility

On a tie vote at their May meeting, the CalPERS Board of Administration rejected Treasurer John Chiang’s motion to declare once and for all that the fund will remain divested from tobacco. Board President Rob Feckner, who voted for the same motion at the April meeting, switched sides and opposed it.

CalPERS’ apparent willingness to consider reinvesting in an industry that causes millions of deaths and billions in healthcare costs has gained a lot of attention in the press as the influential fund consistently promotes itself as a leader in socially responsible investing.

Fossil Free California’s Sandy Emerson’s comments in advance of the vote were featured in the Sacramento Bee’s coverage of the meeting. She was one of five speakers—from FFCA, the American Cancer Society, and the California Faculty Association—who addressed the board on the issue, urging them not to invest public pension funds in an industry that deals death to millions.

Finally, the only concession the Board made was to shorten the period during which they will study tobacco finance and “educate” stakeholders (!) to six to nine months from twice that long.

Within minutes of the vote, CalPERS issued a press release that shows just how important the tobacco question is for fossil fuel divestment, as well as the fund’s reputation as a leader in socially responsible investing. Language that was likely prepared before the meeting indicates that staff is determined to force a Board vote that would make any divestment provisional, based on financial returns:

CalPERS staff will continue to develop a new loss threshold policy for all non-tobacco divestments. Such a policy would include a provision that would trigger an automatic review of divested assets when losses incurred as a result of the divestment reach a certain amount. The policy will call for staff to inform the Board in open session when a loss threshold is triggered. Staff anticipates bringing a draft of this policy to the Board this summer

Five speakers against CalPERS reinvestment in tobacco, at the May Board meeting

Speakers at the May 2016 CalPERS Investment Committee meeting: from left, Janet Cox, Eric Knapp, Jim Knox, Kevin Wehr, and Sandy Emerson. Don’t miss the sign over our heads.

In fact, staff presented just such a policy in February, March, and April of this year—and each time Board members expressed concerns (mostly about tobacco, which was the obvious focus) and sent it back for revisions. It’s clear that adopting such a “loss mitigation policy” would tell the world that the largest public pension fund in the U.S. is only interested in socially responsible investing if it makes money for the fund, and in fact is eager to invest in any sector, no matter how lethal, if the money looks good.

Trouble is, CalPERS is a PUBLIC pension fund, and they are investing California’s tax dollars in industries that kill people and wreck the planet, in order to pay my pension. I, for one, object—both as a taxpayer and a pensioner.

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