California has been hit hard by the effects of climate change, including more intense wildfires and drought. So it’s appropriate that San Francisco is hosting the Global Climate Action Summit Sept. 12-14.
As a Californian and a county supervisor, I am proud to be a part of a state that is at the forefront of environmental awareness. However, I am also concerned that radical changes in policy based on knee-jerk reactions, not on sound public policy, will come at the cost of public workers and retirees.
Attendees at the summit will hear speakers call for environmental change by divesting in fossil fuels. But divestment would result in significant losses for CalPERS and CalSTRS, which are already massively underfunded. To close the gap in funding, one solution would be large cuts to pensioners’ accounts. Obviously, this is unacceptable.
San Francisco, arguably one of the most liberal cities in America, rejected a fossil fuel divestment plan for its retirement system in January. Instead, the city invested a small portion of its fund into an environmentally friendly portfolio. San Francisco decided on this course because with full divestment, it would lose influence as a shareholder in fossil fuel companies. If you don’t have a seat at the table, your voice isn’t heard.
The CalPERS and CalSTRS boards also agree that divestment is not the right choice. CalPERS says that its fiduciary responsibility drives investment decisions and also says that there’s considerable evidence that divesting is “an ineffective strategy for achieving social or political goals, since the usual consequence is often a mere transfer of ownership of divested assets from one investor to another.”
I agree. Divesting takes away our ability to influence real change. If we wish to move towards a greener future, we must make smart decisions.