California pension funds face call to divest from Russian holdings. Here’s what they own
Late Sunday night, California Gov. Gavin Newsom’s official Twitter account posted a photo of the state Capitol lit in blue and yellow with the caption, “California stands with the people of Ukraine.”
At the same time, California’s largest public pension funds own tens of thousands of shares of stock in Russia’s 25 largest companies, including several Russian state-owned enterprises. Those shares were valued at nearly $1.5 billion on June 30, according to a Bee review of CalPERS’ and CalSTRS’ latest investment reports.
The California Public Employees’ Retirement System and California State Teachers’ Retirement System are among the largest public pension funds in the world. Combined, they control about $775 billion in assets, according to recent valuations.
Some nations, states and companies moved to divest from Russian companies over the weekend following the invasion of Ukraine — an action that the Ukraine government explicitly endorsed.
New York Gov. Kathy Hochul issued an executive order Sunday telling state agencies to divest. The country of Norway said on Sunday that its sovereign fund would divest. Energy giant BP said Sunday it would quit its $25 billion stake in a large Russian oil company, Rosneft.
Senate Majority Leader Mike McGuire, D-Healdsburg, announced plans Monday to introduce bipartisan legislation that would force California’s pension funds to divest from holdings in Russia.
“The world is watching the atrocities taking place in Ukraine. It’s sickening,” McGuire said in a news release. “We must stand strong for the people of Ukraine. That’s why we all must mobilize to stop Russia in its tracks. California has unique and remarkable economic power in this circumstance. As the fifth largest economy in the world, we must use this power for good. We can help stop this autocratic thug, Putin, by advancing this critical legislation and enacting our own financial divestments.”
As of June 30, CalPERS controlled about $725 million worth of stock in Russia’s largest companies. It owned more than $100 million in stock for four Russian companies: Sberbank, a state-owned finance company; Gazprom, a largely state-owned energy company; Novatek, a massive producer of natural gas; and Lukoil, a Russian energy company.
The value of all of those stocks is likely much less today, following sanctions against Russia. For instance, share prices in Sberbank plummeted more than 70% in the last week.
Those figures only include Russia’s largest companies. Late last week, a CalPERS spokesperson told Reuters that the investment fund had about $900 million in exposure to Russia.
CalPERS typically resists calls for divestment, but has been ordered by the state to divest from various holdings over the years, including those in Sudan and Iran.
Theresa Taylor, the president of the retirement system’s board of directors, said Monday that she expects the board will discuss divestment from Russia at its upcoming meeting, scheduled March 14 to 16.
“While I am personally appalled at Russia’s actions, and every pension has holdings in Russia differently, ours are half in public equities and half in private equity and real assets,” Taylor said in a text. “In public markets, access to sell the Russian assets is closed right now due to sanctions. As to the other half, as fiduciaries we really have to look if we can afford to just get rid of those assets.”
As of June 30, CalSTRS controlled about $745 million worth of stock in Russia’s largest companies, including nearly $290 million in Sberbank; $195 million in Lukoil; $56 million in Gazprom and $44 million in Novatek.
A Reuters calculation put CalSTRS total Russian exposure around $800 million. A CalSTRS spokesperson told the news agency that it would comply with all financial sanctions the United States enacts against Russia.
This story was originally published February 28, 2022 at 3:47 PM.