California’s two major public pension funds could be prohibited from investing in Turkey under a proposal the state Assembly passed despite opposition from the funds.
The legislation would require the funds to halt new investments and unload existing ones if the federal government imposes sanctions on the country over the systematic killing of about 1.5 million Armenians starting in 1915, known as the Armenian Genocide.
The $360 billion California Public Employees’ Retirement System opposes the bill on grounds that divesting from Turkey could diminish investment returns.
“Every dollar in investment returns that is forgone, or expended on transaction costs and fees, must be offset by employer and employee contributions,” fund staff wrote in a memo. “If CalPERS were to divest from Turkish investment vehicles and the companies performed well, employers and employees would bear the investment loss and transaction costs to maintain divestment through increased contribution rates.”
The fund typically opposes divestment bills, preferring to consult its own policy on sustainable investments rather than outside restraints.
CalPERS has divested from Sudan, Iran, manufacturers of guns that are illegal in California, thermal coal and certain companies that don’t meet its environment, social and governance standards.
Since 2001, the divestments have cost the fund about $2.5 billion, primarily driven by tobacco, although some divestments have saved the fund money, an analyst told the board in March.
The $234 billion California State Teachers Retirement System also opposes the measure, in accordance with its policy against supporting legislation “that infringes on the investment authority of the board.”
The bill passed the Assembly unanimously in a May 23 vote, with 17 members not voting, and proceeded to the Senate. Similar legislation passed both chambers last year but was vetoed by former Gov. Jerry Brown.
Adrin Nazarian, D-Los Angeles, authored the bill. In a statement, Nazarian said its passage in the Assembly sends a “clear message to Turkey to stop their deceitful campaign of genocide denial.”