New report from University of Waterloo reveals $21 billion loss from just six US public pensions’ fossil fuel holdings
On June 28, 2023 the University of Waterloo released a groundbreaking report revealing that if six U.S. public pension funds had divested 10 years ago, they would have been $21 billion richer, an average 13% higher return rate. These six pensions collectively represent approximately 3.4 million people. The report is entitled, The Impact of Energy Investments on the Financial Value and the Emissions of Pension Funds.
This includes CalPERS (the California Public Employees Retirement System) and CalSTRS (the California State Teachers Retirement System) – the two largest pension funds in the U.S. By not divesting, CalPERS experienced a 5.15% loss of returns, over $4.7 billion in missed returns, or $3,163 per beneficiary. CalSTRS experienced a 5.67% loss of returns, over $4.8 billion in missed returns, or $5,114 per beneficiary over the last ten years, by not removing fossil fuels from their investment portfolio.
“This new Waterloo data hits home for me. My mom is a beneficiary of CalSTRS – my family is depending on that retirement income for security. How can CalSTRS invest in fossil fuel companies driving climate change, heat waves, wildfires, and flooding, all while losing income for workers? While CalSTRS invests in the fossil fuel companies polluting our air, water, and soil, they could have divested ten years ago, bringing $5,000 more dollars to every single beneficiary – people like my mom. For us, $5,000 could have bought a water purification system. In the face of refinery air pollution, $5,000 could have purchased an air filtration system. With $5,000, we could have invested in home flood protection measures to protect us from climate-change-fueled historic flooding. It’s long past time for CalSTRS and CalPERS to get out of the business of investing in, and loaning money to fossil fuel companies.”Miguel Alatorre, Jr., Fossil Free California Campaigns Organizer
The Waterloo report reveals comparable results for scenarios with and without dirty energy in the portfolio between 2019 and 2022 to explore how recent changes in the performance of the energy sector due to major global events such as COVID-19 and Russia’s war in Ukraine influence the funds’ public equity performance.
In an op-ed in the Los Angeles Times, Bill McKibben notes, “Along with being actively bad for the planet, fossil fuel has been actively bad for its shareholders. It dramatically underperformed other asset classes for the past decade.”
Today’s findings are entirely consistent with previous findings in Corporate Knights reports covering the decade from 2009 to 2019 showing a loss of $6,072 in value per CalPERS member by not divesting of fossil fuels over that ten-year period and and $5,752 per CalSTRS member in 10 years.
To date, 1,591 institutions representing $40.51 trillion in assets have committed to some level of fossil fuel divestment, including three New York City pension funds, the largest public pension in Washington, DC, the Chicago Public Teachers’ Pension Fund, and massive global pensions like ABP and PFZW.