Prospects at CalSTRS are bright for a real shift in investment strategy. Members of the board are increasingly tuned in to the dangers of climate change, and they are beginning to adjust their financial decisions to focus on more sustainable holdings. We at Fossil Free California applaud their efforts.
But so far the shift in investment policy is not large enough or fast enough to counter the urgent dangers of the climate crisis. CalSTRS must do more, for the sake of the environment — and for the sake of teachers’ pensions.
Out of Big Oil by 2020
As a result, Fossil Free California is now launching a renewed campaign, urging CalSTRS to divest completely from all fossil fuel companies by 2020, beginning with ExxonMobil, Chevron, and Shell. These Big Oil companies have known for decades that their everyday business practices contribute to climate change, but they have failed to join in the international effort to minimize global warming. In fact, it’s worse than that: they have lied about the effects of their business, pretending that the economy can thrive only by burning oil and minimizing their contribution to the rise in atmospheric carbon.
Since Big Oil companies refuse to modify their business plans or activities, investors — especially CalSTRS — should refuse to own any of their shares.
Sign our petition here, so we can let CalSTRS know that you are among the thousands of Californians who support divestment.
Failed shareholder engagement
As members of CalSTRS and other concerned Californians, we appreciate the Board’s green initiatives over the last year, divesting from coal companies and initiating significant low-carbon investments. Furthermore, over a period of many years, CalSTRS has engaged in good-faith efforts, as shareholders, to engage constructively with oil and gas companies on climate risk disclosure and mitigation.
These good-faith efforts, however, have not been reciprocated. Big Oil has turned a deaf ear to any pleas for environmental sensitivity. In short, shareholder engagement has proven futile. Friendly dialogue and well-meaning resolutions have produced no significant results, and only more decisive action is likely to make a difference. We urge complete divestment.
Quick action needed
Little time remains to avert catastrophe — both financial and environmental — so It is essential to take action quickly. Continued investment in the fossil fuel industry exposes CalSTRS to the risk of the deflating carbon bubble: at least 80 percent of coal, oil, and gas reserves are unburnable (and therefore worthless) if we are to adhere to the under-2°C target of last year’s Paris accords. And over 190 countries have pledged to meet that target. In fact, Bill McKibben warns that the limits on fossil fuels have become even more stringent:
If we’re serious about preventing catastrophic warming,… we can’t dig any new coal mines, drill any new fields, build any more pipelines. Not a single one. We’re done expanding the fossil fuel frontier. Our only hope is a swift, managed decline in the production of all carbon-based energy from the fields we’ve already put in production.
If the Paris target is not met, if Big Oil continues on its heedless way, the results would be dire. Climate chaos would disrupt the global economy, and — among other disasters — it would wipe out much of the value of the rest of CalSTRS’ assets, including non–fossil fuel holdings. Under these circumstances, divestment is the appropriate way to act as a prudent fiduciary and a cautious investment manager.
CalSTRS divestment policy
Fortunately, CalSTRS has already adopted a clear divestment policy. It states that if even one of 21 listed risk factors is violated over a sustained time frame, the Board may consider divestment, when:
- the violation becomes an economic risk to the fund
- a potential for material loss of revenue exists
- it weakens the trust of a significant portion of members to the system
CalSTRS’ current fossil fuel holdings fulfill all three of these criteria with regard to two of the risk factors, environmental and human health risks. On the basis of its own policy, the Board should pursue divestment.
Therefore, for both financial and ethical reasons, we call on CalSTRS to commit to divesting, by 2020, from ExxonMobil, Chevron, Shell, and all other oil and gas companies that have not demonstrated their alignment with positive action on climate change, in both their business models and their operations.
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