Leaders at CalPERS are voicing concerns about a set of bills in the Legislature that would compel that $310 billion pension fund to divest from politically unpopular projects, such as President Donald Trump’s proposed border wall and the Dakota Access Pipeline.
Two of CalPERS’ top officers visited The Sacramento Bee Editorial Board on Tuesday to reiterate their worry that divesting from companies could hurt taxpayers and surrender the pension fund’s vote as a major investor.
“When you divest, you basically take our voice out of the debate,” said CalPERS Chief Operating Investment Officer Wylie Tollette.
The California Public Employees’ Retirement System is watching three bills that could force it and the California State Teachers’ Retirement System to shed certain investments.
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▪ Divesting from companies that work on the Trump administration’s proposed border wall. Assemblyman Phil Ting, D-San Francisco, is behind AB 946.
▪ Divesting from companies that build or finance the Dakota Access Pipeline. Assemblyman Ash Kalra, D-San Jose, wrote AB 20. The CalSTRS board last week voted to oppose the bill unless it’s amended in such a way that it does not demand divestment.
▪ AB 1597 by Assemblyman Adrin Nazarian, D-Los Angeles, which would compel CalPERS and CalSTRS to cut their investments in Turkey. The bill is written as a response to the Armenian genocide of the early 20th century.
In February, dozens of environmental advocates crowded a CalPERS board meeting to urge the fund to divest from the Dakota Access Pipleine, the 1,100-mile project that would move oil through the Upper Midwest. The board declined to divest, but wrote a letter calling on banks financing the project to pressure its builder to consider rerouting the pipleline away from the American Indian tribe that led protests against it.
Since then, CalPERS has touted its proxy votes on different corporate boards to push for improved climate change policies. It’s planning 17 of those votes this year.
Tollette and CalPERS Chief Executive Marcie Frost stressed that the demands for divestment could hurt investment returns.
“To use the CalPERS portfolio as the political football can be damaging to the interests of the state and the taxpayers, because ultimately the taxpayer ends up footing the bill for the benefits,” Tollette said.
Both CalPERS and CalSTRS generally oppose divestment, although they have pulled out of certain investments in the past. CalPERS in December, for instance, shed its last tobacco investments and declined to put more money into nicotine.