In a state whose leaders speak with urgency about fighting climate change, it’s shameful and hypocritical that CalPERS and CalSTRS have billions of dollars in public employees’ retirement money invested in planet-wrecking fossil fuel companies including Exxon Mobil, Chevron and Shell.
Lawmakers were considering changing that by forcing the nation’s two largest public pension funds to divest their holdings in big oil, gas and coal companies by 2031. Legislation to do so cleared the state Senate last month. But days before a key hearing in the Committee on Public Employment and Retirement this week, its chair, Tina McKinnor (D- Inglewood), presented the author with a lengthy list of non-negotiable amendments.
The demands in the 39-page analysis read like a wish list written by the bill’s opponents, including the oil industry and the pension fund boards. Rather than accept the changes, bill author Lena Gonzalez (D-Long Beach) pulled the measure and says she will try again in the future. It was an understandable move.
The amendments would slash the number of companies and types of investments the pension boards would have to shed. They would push back the deadline to divest to 2045, delay transparency reporting requirements by 20 years and allow the funds to keep making new fossil fuel investments until then.
They’d let them keep fossil fuel investments even beyond 2045, the year California has pledged to reach net-zero carbon emissions, if the pension boards determine the companies have made “measurable progress” transitioning from oil and gas. And most bizarrely, the amendments would remove the term “fossil fuel company” from the legislation, which the committee’s analysis described as a “socio-environmental construct that, historically, is used to vilify oil companies and their products,” and replace it with “energy company” instead.
McKinnor, who blocked the same legislation last year, said in an interview Thursday that she did not meet or negotiate with oil companies about the bill. She said her amendments were intended to be a compromise to benefit public employees and their retirement money, developed after she met with representatives of some of the state’s largest public employee unions that have remained neutral on the bill.
McKinnor wasn’t really offering a compromise, but a poison pill so unreasonable and riddled with loopholes, carve outs and delays it would be inaccurate to call it fossil fuel divestment.
That shouldn’t deter divestment supporters, including educators, state workers and youth activists and environmentalists who held a rally Wednesday and vowed not to back down from the fight.
They have solid financial arguments on their side, including the experience of other big institutional investors such as New York City’s public pension funds and the University of California that have already concluded that fossil fuel investments are too volatile and that their portfolios will do as well or better without them.
California leaders must show they are more than just talk when it comes to climate change and start to ditch dirty, dangerous fossil fuel investments. It’s a smart move not only because these holdings are financially risky in a world that’s shifting to renewable energy, but on moral grounds. It’s wrong to use the retirement money of teachers, firefighters and state workers to support a deceitful industry that profits off environmental destruction and human suffering. It’s why CalPERS divested from tobacco producers, gun manufacturers and thermal coal companies years ago.
If committee leadership won’t give real fossil fuel divestment legislation a fair shake in the future, Assembly Speaker Robert Rivas (D-Hollister) should step in and make sure a proposal advances to a floor vote.
California can’t be a climate leader if it continues to prop up harmful and reckless fossil fuel companies whose pollution threatens to consign future generations to an unlivable planet. To end their stranglehold on the public, we have to let them go.
