To Help Ukraine, Will Pensions Divest From Unethical Fossil Fuels?

By David Page and John Avalos | March 10, 2022

San Francisco & California pension funds: divest from both fossil-fuels and dictators!

Many of us have been watching the images of terrible destruction and heartbreak from Ukraine. Have you wondered how President Putin finances his military machine? As much as 50% of Russian government revenue comes from fossil-fuel related businesses.

Unfortunately, California and San Francisco pension funds (CalSTRS, CalPERS, and SFERS) continue to invest millions of dollars in Russian oil and gas corporations. For example, based upon information from 2017, SFERS has approximately $9 million in three major Russian oil/gas companies: Gazprom, Rosneft, and Lukoil. Beyond that, CalPERS and CalSTRS have hundreds of millions of dollars in Russian hydrocarbon enterprises.

Several attempts have been made to get pension decision-makers to divest from fossil-fuel corporations, which are responsible for ungodly amounts of pollution. Many of these companies are owned by unsavory governments who are among the world’s worst human rights abusers. Russia is not alone in this regard. Kazakhstan, Turkmenistan, and Saudi Arabia also fit into this ugly category. Another example: SFERS, again using slightly old information, has approximately $9 million invested in the Communist Party-controlled Chinese National Offshore Oil Corporation.

The trustees of the pension programs have consistently cited two reasons for blocking divestment efforts.

The first is “fiduciary responsibility”, which means they are obligated to go after any legal investment opportunity that may harness the most profit — no matter how immoral or unethical. And this year, fossil-fuel businesses have had their profit margins go up, despite a long-term overall price decline. The longer downward trend is forecast to continue in the future as renewable energy becomes more popular (but not yet in 2022). By contrast, the Environmental/Socially-responsible/Good-governance (ESG) impact investing movement has shown that solid financial returns are not dependent on dirty energy money. The endowment of the University of California has divested from fossil-fuels, as have many other trust funds and college institutions.

The second objection is that retirees want their pension to invest in whatever will “return” the most money. Is this true? We know of no polling done which asked retirees for input on how to balance despicable acts versus extra bucks on some type of priority scale.

Fortunately there are solutions.

San Francisco State Senator Scott Wiener is a Co-sponsor of SB 1173. This bill would require CalPERS and CalSTRS divest from 200 fossil fuel companies within five years. Sen. Wiener and San Francisco Assemblyman Phil Ting are behind other proposed legislation urging CalSTRS and CalPERS to divest from Russian assets.

And within San Francisco, there’s talk of a ballot measure that would allow voters to have a say about the divestment policy of SFERS. Do San Franciscans really want pension fund money going to the bank accounts of Xi Jin-Ping, or Vladimir Putin, or Mohammad bin Salman?

Several Ukrainian groups have asked for an end to “investment in Gazprom, Rosneft…LukOil, Russian Coal and others.” Although there’s often a big gap between recommendations and implementation, the first step should be to let us have a public debate and voice our opinion!

What you can do:

  • California residents can contact the Governor and State Representatives to follow through with a bill directing CalSTRS and CalPERS to divest funds from Russian fossil-fuel companies — as well as other unethical multinational oil/gas firms. Tell your representative to strengthen SB 1173 to include human rights abusers along with giant polluters, such as Saudi Aramco.

  • San Francisco residents can contact the Mayor and Board of Supervisors to encourage a similar proposal for SFERS — via voter approval on a 2022 scheduled election date.

We do not have to sit idly by while fossil-fueled tyrants stamp out democracies and poison our atmosphere.

This piece was originally published by Medium on March 3, 2022.

David Page is an U.S. Army veteran, and a retiree member of SEIU, Local 1021’s Climate-Justice Committee.

John Avalos is a former San Francisco Supervisor who — with his legislative aide Jeremy Pollock — authored 2013 legislation urging SFERS to divest from fossil-fuels. Mr. Avalos is now an organizer with the National Union of Healthcare Workers. Mr. Pollock is the Director of San Francisco’s Local Area Formation Commission.