CalPERS has finally divested from three more thermal coal companies, as required by law. Following the passage of SB 185 (2015) CalPERS divested from all but three (out of 17) selected thermal coal mining companies: Exxaro, Adaro, and Banpu. In an email to Fossil Free California, CalPERS’ Managing Investment Director Anne Simpson said that CalPERS no longer owns those companies: “As per the earlier board discussion, the three companies were retained for further engagement, which did not make progress hence the sale.”
The divestment from the remaining three thermal coal companies from the 2017 list shows the power of stakeholder pressure. CalPERS re-started engagements with Exxaro, Adaro, and Banpu in October, 2020, after Fossil Free California published its hard-hitting report “CalPERS Continues to Invest in Coal”. At the March 15, 2021 Investment Committee Meeting, Anne Simpson stated that the companies’ responses were being reviewed and that a decision would be announced toward the end of 2021.
We celebrate the fact that FFCA’s letter-writing campaign generated 626 individual letters to CalPERS, after we sent a series of detailed letters to CalPERS executive and investment staff and published the report. This long-awaited divestment success is thanks to the persistence and commitment of pension members, beneficiaries, and concerned Californians who sent letters, made public comments, and generally kept the pressure on for CalPERS to complete its mandated divestment.
Now, Divest the Rest of the Coal
A recent Guardian article detailing CalPERS’ anti-divestment stance repeats the common misperception that “CalPERS did stop investing in coal under pressure from the California state government and because it was hard to see any kind of future for coal companies.” But CalPERS has only divested a small portion of its coal-related holdings: the 17 thermal coal mining companies required by law. Under the expanded criteria of the Global Coal Exit List, CalPERS still holds more than $9 billion of investments in 160 companies that are part of the thermal coal value chain, including coal mines, coal storage and distribution, and coal-fired power plants. Additional coal holdings may well be hidden in CalPERS’ private equity and debt investments.
Because it’s clear that there’s no future for coal companies, why does CalPERS remain invested? CalPERS’ Climate Action 100+ engagement efforts focus on oil and gas enterprises. There’s really no excuse for continuing to invest in coal, especially when COP26 President Alok Sharma has said one of his goals for the meeting is to “consign coal to history.”
Sadly, CalPERS’ practice of passive management of equities and its increasing appetite for private equity and debt, guarantees that it will remain invested in fossil fuels, including coal. With passive management, CalPERS lets the “business as usual” market make the investment decisions. In private markets, CalPERS’ holdings can include fracking companies and oilfield services. By its own admission, CalPERS’ portfolio represents a temperature trajectory of 3.2 degrees Celsius (“CalPERS’ Investment Strategy on Climate Change,” p. 36).
Without divestment, Californians’ retirement money will continue to finance a horrifying future in an unlivable world. It seems to us that CalPERS is not a climate advocate, but rather an enabler of climate chaos.