After a long negotiation and amendment period, SB 560, FFCA’s bill that defines “financial climate risk”, was quickly passed on its second hearing by the California Senate’s Public Employment and Retirement Committee, chaired by Dr. Richard Pan. It was all over in about 20 minutes. You can watch it here — it’s quite painless: http://senate.ca.gov/media/
The bill defines financial climate risk in statute and requires reporting by the funds (CalPERS and Cal STRS) of both the carbon intensity of their portfolio and actions they take to minimize climate risk. The bill also sets a precedent and can serve as an example for other funds and other states. Just one more way that California can lead on climate.
It’s a huge deal for FFCA’s idea to have turned into a bill carried by an environmental superstar like Senator Ben Allen (D-Santa Monica), supported by his amazing legislative staff director, Tina Andolina, and co-sponsored by Environment California. Plus, the bill has attracted active assistance from national and international organizations such as Center for International Environmental Law (who helped draft it and continues to strategize with us), DivestInvest Network, 2Degrees Investing Initiative, As You Sow, and a significant number of financial management professionals and attorneys familiar with pension law in California and beyond. It’s a growing list!
As currently amended in negotiations with CalSTRS (with CalPERS watching closely, we presume), the heart of the bill is the definition of “financial climate risk” that will be in statute in the US for the first time.
Financial climate risk” means material financial risk posed to an investment by the effects of the changing climate, such as intense storms, rising sea levels, higher global temperatures, economic damages from carbon emissions, and other financial risks due to public policies to address climate change, shifting consumer attitudes, changing economics of traditional carbon-intense industries, and other transition risks.
This coupled with the public reporting requirement in the bill will set an example and a precedent for other states and other funds around the country. Our supporters are committed to spreading it around after it passes.
The next stop for SB 560 is a fiscal committee, where the funds weigh in on the financial impact of the new reporting requirements (which don’t go into effect until 2020), and then to the Appropriations Committee.
After Senate Appropriations, it’s on to the Senate floor – and then the process starts over in the Assembly. For more details, see this simple powerpoint I put together for training purposes.
What we need from everyone now is help building support for the bill in both the Senate and the Assembly. If you can contact your legislators, that will be really helpful. Office visits (when you’ll likely talk with staff) are the best, followed by letters mailed or faxed to the Sacramento office. Your message can be simple:
Please add your name as co-author to Senator Ben Allen’s SB 560, which defines “financial climate risk” for our state’s public pension funds. This is another way California can lead on climate!
You can also click over to FFCA’s volunteer page and sign up to join our legislative team. That will allow us to bug you more specifically when one of your representatives is key to a vote on SB 560, and we’ll be getting groups together to make those office visits.