California’s public pension funds would need to drop their current investments in coal and avoid making new ones under a bill the California Assembly sent to Gov. Jerry Brown on Wednesday.
The California Public Employees’ Retirement System and California State Teachers’ Retirement System oversee portfolios worth about $301 billion and $191 billion, respectively. A spokesman for CalPERS said the fund currently invests in between 20 and 30 of the type of thermal coal mining companies covered by Senate Bill 185, with a cumulative value of between $100 million and $200 million. A spokesman for CalSTRS said the fund’s investment portfolio holds approximately $40 million in thermal coal.
Policies combating climate change are preoccupying lawmakers this year. Advocates of SB 185, carried by Senate leader Kevin de León, D-Los Angeles, and passed on a 43-27 vote, argue California should not be lending financial support to the coal industry at a time when the state tries to expand the use of renewable energy.
The bill “aligns our investment policies with our values,” said Assemblyman Rob Bonta, D-Alameda, adding that the bill would not violate pension funds’ fiduciary obligations because “coal is a bad investment.”
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Republicans voted against the bill and several Democrats withheld their votes, with critics saying the measure would undermine the pension funds’ independence and reduce investment returns that pay retirees’ benefits. A recent Sacramento Bee analysis found California’s pension debt becoming worse.
“We need to be concerned about the long-term sustainability of CalPERS and our pension programs,” said Assemblyman James Gallagher, R-Yuba City. “We need to make (investment) decisions based on good, sound financial decisions, not based on emotions.”