Disrupting Business as Usual at CalSTRS

The California State Teachers’ Retirement System Investment Committee meeting came to an abrupt halt on Wednesday, November 6, as middle school students interrupted the proceedings with a recording of Greta Thunberg’s recent speech to the UN, and unfurling a banner that read “Dear CalSTRS Board Members, Our futures depend on you divesting the teachers’ $6 BILLION from the murderous fossil fuel industry. Say YES to our meeting requests. – From the many young climate justice activists who will continue to be at every one of your meetings until you divest.” The disruption came shortly after representatives of several climate justice groups presented findings of a new report showing that CalSTRS, the second largest US public pension fund, has lost over $5.5B since 2009 by remaining invested in fossil fuels.

“Fossil Free California is pleased to share the results of a careful retrospective study by Corporate Knights,” said Sandy Emerson, Board President of Fossil Free California. “The study compares, quarter by quarter, returns from the public equity portion of the CalSTRS portfolio – with fossil fuel holdings, and without. The findings are alarming: STRS would be $5.5 billion richer today if they had divested from fossil fuels ten years ago. On a per-member basis, this translates to a loss of $5,572 per member of CalSTRS.”

“The fund managers claim they need to stay invested in order to influence the fossil fuel industry,” said Fossil Free California Executive Director Vanessa Warheit. “But CalSTRS doesn’t need to invest billions in order to engage with fossil fuel companies. Why are they putting so much of their members’ money at risk?”

Shortly after the Investment Committee came to order, eleven-year-old Magdalena, an activist with Earth Guardians Bay Area Crew, performed a silent dance – synchronized to Greta Thunberg’s speech – and directed her performance to the members of the CalSTRS Board and staff. As a security guard tried in vain to usher Magdalena out of the room, her father called out “Don’t touch her!” Harry Keiley, Chair of the Investment Committee, called an immediate recess, upon which all but two Board members – Board Chair Sharon Hendricks and Matt Saha (representing Fiona Ma) – immediately fled the room. 

After Magdalena’s dance, CalSTRS member Park Guthrie stood up and addressed the packed hearing room. “I am a 6th grade teacher from Sonoma County. My students have now missed school for fourteen days due to four different climate-related disasters in just two years. Divesting from fossil fuels would be a powerful way for California educators to signal that we do not consent to the climate neglect which puts all of our students at risk.” Guthrie, who teaches at Salmon Creek Charter School, is also co-founder of the nonprofit group Schools for Climate Action.

Iman, an 11 year old member of Earth Guardians Bay Area Crew, told reporters: “I live in Richmond right next to the oil refinery. I can see with my own eyes the urgency for closing down fossil fuel companies. We want CalSTRS to reply to our meeting requests. We can’t just keep sharing our testimonies that they don’t have to respond to. We are at the beginning of a mass extinction. We need to be talking with each other so we can fix this!”

After a two-hour adjournment to closed session, the Investment Committee agreed to resume their public meeting and to amend their agenda to allow for an hour of public comment. Jane Vosburg, a CalSTRS retiree and member of Fossil Free California, said, “These are not normal times. During this climate emergency, I was grateful that teachers, students, retirees and members of the public were able to voice their demand that CalSTRS divest from the industry that is responsible for this crisis — as well as losing the fund money.”

UC Davis students, representing the Climate Reality Project and the Sunrise Movement, also addressed the board.

Megan Phelps, a UC Davis student, said “We’re asking CalSTRS to defend the futures of young people like me, and those even more vulnerable. Because teachers have always been more than educators. They’ve been the creators of our safety. So please, divest from fossil fuels.”

Karen Perkins, a retired teacher and CalSTRS member, read aloud a recent official endorsement of CalSTRS divestment by the Oakland Education Association – the Oakland chapter of the California Teachers Association. The resolution “strongly urges CalSTRS to immediately instruct asset managers to stop any new investment in fossil fuel companies; and ensure none of its directly held or commingled assets include holdings in fossil fuel public equities or corporate bonds, beginning immediately.”

CalSTRS currently has over $6 billion invested in fossil fuel companies – representing just 2.4% of its $242.1 billion in assets under management. It is America’s second largest pension fund, and the 11th largest pension fund globally. CalSTRS staff and board members claim that they need to stay invested in order to engage the fossil fuel industry and help push the industry to address climate change. However, the Securities Exchange Act of 1934 clearly states that a company may disregard any shareholder proposal that threatens its ordinary business operations. SEC rules also state that the minimum required for engagement is $2,000 in holdings.

The divestment movement recently announced that over $11 trillion in assets has been committed to divest from the fossil fuel industry. Institutional investors committing to divest range from the Rockefeller Family Fund to the Norwegian Sovereign Fund – and the fossil fuel industry has taken notice. The 2018 “Oil and Money” fossil fuel industry conference devoted one of its sessions to discussing the question: “What more does the industry need to do on the PR front to combat the growing fossil fuel divestment movement?”

2 Comments

  1. Steve Murphy on November 14, 2019 at 12:01 pm

    Great work. The Corporate Knights report demonstrates the peril of CalSTRS remaining ‘engaged’ in the fossil fuel industry even if it’s for some theoretically noble goal like getting the industry to address climate change. Doing so is penalizing the returns for their constituents.

    For those who might claim that the results were cherry-picked, there’s a full decade here — and there’s little likelihood that fossil fuels industry, which continues to shrink as a percentage of the overall investable market, is going to reverse that trend.

    So, if doing it for the kids doesn’t suffice, then in the name of fiduciary responsibility it’s time to move on.



  2. Ed TePas on November 16, 2019 at 1:53 pm

    We have to keep pushing to force CalSTRS and CaPERS to get dis-invest of all fossil fuel stocks. Number one; it’s our money they are literally burning up in the coal plant smokestacks. Number two: the fossil fuel industry is not going to listen to us but if all investors wake up to the peril of our planet and pull their money out, maybe, just maybe, we will stop killing our planet.
    I am a retired teacher and I want CalSTRS to stop using my money to kill our future.