Coal stocks are on the rebound, but California’s main public pension fund won’t see investment gains from that industry.
The California Public Employees’ Retirement System is almost entirely out of coal, according to a report it released Monday on its compliance with a 2015 law that compelled it and the California State Teachers’ Retirement System to divest from coal by July 1, 2017.
Coal stocks were a drag on CalPERS when the Legislature passed its divestment law.
According to CalPERS’ 2016 investment report, the pension fund’s coal stocks were worth about 10 to 50 percent of what it paid for them.
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The worst performer at the time was Peabody Energy.
CalPERS owned about 46,000 shares in the company a year ago that were worth about $63,000. CalPERS had paid $13.5 million for those shares.
On Monday, Peabody stocks were trading about $30 a share. That’s well below their peak value, but about 15 times their value when the company declared bankruptcy in April 2016.
CalPERS does not disclose when it sells stocks. Megan White, a CalPERS spokeswoman, said the pension fund had some Peabody stock this calendar year and it has since sold its stake in the coal company.
Democratic lawmakers who voted for the coal divestment bill characterized it as a stand against fossil companies whose industries contribute to global warming as a well as a smart move for the pension fund because of the plummeting value of those stocks.
“Coal is a losing bet for California retirees and it’s also incredibly harmful to our health and the health of our environment,” Senate President Pro Tem Kevin de León, D-Los Angeles, said when Gov. Jerry Brown signed the law in October 2015.
President Trump’s election has somewhat changed the industry’s outlook.
The American Coal Council in recent months has praised Trump’s decision to withdraw from the Paris climate change accord, as well as his executive orders that have stalled the Obama administration’s clean power plan and allowed coal companies to again lease federal land.
CalPERS in its report said it divested shares from 14 coal companies that were worth $14.7 million when the pension fund sold them. Stocks for 13 of the 14 companies are worth more than they were a year ago when the pension fund was divesting from the industry.
In 2015, CalPERS had stock in 24 coal companies that was worth about $83 million, according to a staff report describing its exposure to the divestment bill.
CalPERS generally opposes divestment, arguing that policies that force it to pull out of a single industry tie the hands of investment managers and increase risk for the overall fund.
CalPERS has a portfolio worth about $323 billion. It earned 11.2 percent investment return over the past year, but is considered underfunded because its assets are worth about 68 percent of what the pension owes to its members.
This year, it has opposed bills that would have compelled it to divest from companies in Turkey, and those that build the controversial Dakota Access Pipeline or work on the Trump administration’s proposed border wall.
CalPERS kept a stake in three coal companies that persuaded the pension fund that they were moving into different kinds of energy production. Each of the three companies – Adaro of Indonesia, Banpu Public Company of Thailand and Exxaro Resources of South Africa wrote to CalPERS and outlined new investments in renewable energy, which met a requirement in the state law that allowed the pension fund to continue investing in them. CalPERS’ stake in those companies is worth $11.2 million.