Callout that reads Hyberbole in the Hearings: Pension Funds Exaggerate the Cost of Divestment

What Does Divestment Cost? Misinformation from CalPERS and CalSTRS

Read the full report.

The “fiscal impact” analysis for the Appropriations Committee in the state Senate or Assembly can make or break a bill. For divestment bills, CalPERS and CalSTRS have repeatedly given imprecise, incorrect, and inflated figures on the costs of divestment, including in the numbers reported to the Appropriations Committee for 2022’s Fossil Fuel Divestment bill, SB 1173.

Below is a summary of misleading statements in three areas:

1. The funds have wildly exaggerated losses from past divestments.


  • In two 2022 hearings on last year’s bill, SB 1173, CalSTRS’ Governmental Affairs Director Joycelyn Martinez-Wade asserted that CalSTRS’ past divestment actions have cost the Fund “$9 billion dollars.” 
  • At the Joint Legislative Hearing of March  9, 2022 and repeated on CalPERS’ website, CalPERS CEO Marcie Frost claimed that divestment efforts have cost  CalPERS “$8 billion dollars.” 


  • A consulting firm hired by CalPERS, Wilshire and Associates, found that in the “last affirmation by the Investment Committee, for the period up to June 30 2020, all active CalPERS divestment programs have delivered positive performance.” 
  • CalSTRS has not published a similar analysis but one would expect similar results.

2. The funds claim that there are huge transaction costs associated with divestment. 


  • In the analysis for 2022’s Fossil Fuel Divestment bill, SB1173, CalPERS had claimed that it would cost them $75-$100 million to sell the stocks. 
  • CalSTRS had claimed an estimated $11.6 million in costs.


  • In its study of CalPERS’ past divestments, Wilshire and Associates found that the transaction cost associated with “funding trades (selling assets), [is] considered negligible in all cases except for tobacco.” 
  • The fiscal note to the State of Maine fossil fuel divestment legislation described the transaction costs of selling shares of divested companies as minor, stating that  “Additional costs to the Maine Public Employees Retirement System and the Office of the Treasurer of State to implement the requirements of this legislation can be absorbed within existing budgeted resources.”
  • Fund managers buy and sell shares all the time, and these costs are already covered in the ordinary course of business.

3. The funds have claimed that fossil fuel divestment will cost them billions in losses. 


  • In March, 2022, CalSTRS Deputy Chief Investment Officer Scott Chan was quoted as saying “divestment has a potential loss of $20 billion for the fund.” 


  • Two recent studies by analysts from BlackRock and Meketa “separately concluded that investment funds have experienced no negative financial impacts  from divesting from fossil fuels. In fact, they found evidence of modest improvement in fund return.”
  • According to former New York state vice comptroller Tom Sanzillo, “Those who argue that a fund will lose money [by divesting] … are absolutely wrong.  Oil and gas stocks have collapsed over time, despite the current high oil and rising stock prices.”

Sanzillo added, “You cannot be romantic about business decisions. When an investment starts to fail it’s your responsibility to act. Divestment is a defensive financial move to protect funds from losses and the planet from current and future catastrophic events.”

Read the full report.


  1. Steven Marx on May 18, 2022 at 7:35 am

    Thanks for this material.
    It may be of use in the effort to get Cal Poly San Luis Obispo Foundation to Divest, though that’s small potatoes compared to CALPERS and CALSTRS