CalPERS, the $291.3bn (€215bn) California-based pension giant, has rejected calls from elected officials in its home state to divest from fossil fuel companies, saying it prefers to engage with the firms to solve climate change.
CalPERS, which provides pensions to public officials in California, has around $10bn invested in fossil fuel companies. Now some local officials, namely the mayors of Berkeley, Richmond and Oakland, have urged the fund to divest them.
They argue that they are directly contributing to climate change and that pension savings may be at risk if future regulation leads to “stranded assets” or unused fossil fuel reserves.
“It’s time for CalPERS to take our public pension dollars out of dirty fossil fuels and reinvest in building a clean energy future, for the sake of our health, our environment and our children,” wrote the mayors in a letter to the pension fund published in a local newspaper. Last month, the Oakland City Council joined more than two dozen US cities in pulling city money out of oil, gas and coal stocks.Responding to the letter, CalPERS said that while it shared the concerns about climate change, it would not divest any fossil fuel firms but instead continue to engage with them.
“Over the last two decades, we have been at the forefront of tackling climate change issues through policy advocacy, engagement with portfolio companies and investing in climate change solutions – something we would not be able to do if we did not have a seat at the table,” CalPERS said on its website.
It points to its involvement in the 70-investor, $3trn Carbon Asset Risk (CAR) initiative, which is led by advocacy group Ceres and UK group Carbon Tracker, and the 100-member, $10trn Investor Network on Climate Risk (INCR). Pressure from CAR and other investors prompted statements on climate risk from the likes of BP and ExxonMobil earlier this year.
“CalPERS has a fiduciary duty to be a principled and effective investor to meet our financial commitments to our members and future members,” the fund says.