As the impacts of climate change begin to wreak havoc on our bisophere, the fossil fuel divestment movement has gained remarkable momentum. Globally, 1,500 institutions representing over $40 trillion in assets have already committed to some level of divestment from the fossil fuel industry.1
Despite over a decade of pressure from their members, the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) continue to invest billions in the fossil fuel industry on behalf of their beneficiaries. Studies have shown that if CalPERS and CalSTRS had divested from fossil fuels in 2010, they would have generated an estimated additional $11.9 billion in returns by 2019.23 So why do California’s public pension funds remain invested in the fossil fuel industry?
CalPERS and CalSTRS claim they are engaging with the fossil fuel industry as stakeholders to mitigate climate change by affecting the conduct of oil, gas, and coal companies. However, a review of their 2022 proxy votes reveals that their shareholder engagement efforts are not only ineffective—they’re undermining climate action.
We have identified three indefensible failures of the funds’ engagement efforts:
I. This year, CalPERS voted against climate resolutions at major fossil fuel corporations including BP, Equinor, and Shell.
II. CalPERS and CalSTRS voted against all climate resolutions at American and Canadian banks in 2022.
III. CalPERS’ and CalSTRS’ proudest achievement—helping to elect three “climate-friendly” Exxon Board members—has not resulted in any meaningful progress to address climate change.
Despite years of unsuccessful attempts to influence the fossil fuel industry, CalPERS and CalSTRS have failed to get these companies to reduce greenhouse gas emissions, increase their renewable energy production, or reduce fossil fuel financing by big banks.