Today, Senator Lena A. Gonzalez (D-Long Beach) introduced SB 1173 — the Fossil Fuel Divestment Act — in the California state legislature. The bill would mandate that California’s public pension funds stop investing in fossil fuel companies.
For over eight years, teachers, students, and state workers have called for their pensions to divest from fossil fuels. The California pension funds CalPERS and CalSTRS are the two largest public pension funds in the country, with over $9 billion invested in fossil fuel production. Many of CalPERS’ and CalSTRS’ own beneficiaries experience severe health impacts every day because they live near fossil fuel extraction operations, or have endured drought and survived wildfires driven by climate change.
“As a leader in the fight against climate change, California must align the investment choices we make with our moral and environmental goals,” said Senator Lena Gonzalez (D-Long Beach) at today’s press conference. “Investing billions in the fossil fuel companies that are polluting our environment while at the same time trying to meet ambitious emissions reduction goals is contradictory and incongruous. SB 1173 will ensure we remain true to our values and honor our commitment as a State to protecting the environment and the health and future of all Californians, including historically disadvantaged communities of color that are disproportionately impacted by the hazardous pollutants released into our communities by these companies.”
The bill would require these state pension funds to make no new investments in fossil fuel companies, and to divest existing fossil fuel investments by June 2027. In 2015, the Legislature passed a similar bill requiring CalPERS and CalSTRS to divest from coal companies. Since then, the University of California and California State University systems, the states of Maine and New York, New York City, the province of Quebec, the Vatican, Unitarian Church, and World Council of Churches have made similar announcements.
No more risky investments
Divesting CalPERS and CalSTRS from fossil fuels would not only help California achieve the bold action necessary to mitigate climate change; it would serve their beneficiaries’ best interest, too. In 2019, Corporate Knights released an independent study revealing that if the pensions had divested from fossil fuels in 2010, CalSTRS would have netted an additional $5.5 billion by 2019, an opportunity cost that jumps to $11.9 billion for CalPERS.
“Divestment is the right thing to do for climate change and is a smart financial move for our pensions. We have to stop pretending that fossil fuel companies are good corporate citizens,” said Carlos Davidson, CFA Peace & Justice Committee member and retired San Francisco State professor. “CFA wields a powerful credential in California, and we can best serve our principles of social and racial justice by taking a lead in climate justice for future generations of students, families and communities.”
“These pension funds are attempting to leverage their massive influence by engaging with the fossil fuel industry – but by doing so, they are giving tacit support to these companies and enabling them to continue to do what they do best: extract toxic energy, destroy our communities, and delay a transition to clean energy for all,” said Miriam Eide, Coordinating Director at Fossil Free California. “By divesting from fossil fuels, the Boards of these pension funds would use their power to revoke the social license of the fossil fuel industry to poison our communities, destroy our climate, and avoid accountability.”