Sacramento, Calif. September 14, 2020 — A new report analyzing the most recent data on coal holdings in the nation’s largest state pension fund, the California Public Employees Retirement System, reveals that CalPERS still holds millions in thermal coal producers – despite a 2015 state law on thermal coal divestment. The fund has also increased its investments in coal over the past two years.
SB185, the 2015 Public Divestiture of Thermal Coal Companies Act (de León/Hill) requires CalPERS to divest from companies that earn the majority of their revenue from thermal coal production. While the fund divested from several coal companies in 2017 to comply with the law, this new report finds that CalPERS’ portfolio still holds millions in companies that meet the law’s criteria for divestment.
The analysis also shows that CalPERS has increased its coal exposure since 2017, with billions invested in coal-fired utilities and companies in the coal value chain that do not meet the law’s highly constrained definition of “coal investments.” Using the “Global Coal Exit List,” a comprehensive database on the coal industry used by hundreds of financial institutions and insurance companies to inform their coal policies, the report reveals that CalPERS currently has over $6.5B invested in the coal industry. These investments include companies holding the world’s largest coal reserves.
As revealed in the Coal Policy Tool, recently released by Reclaim Finance, CalPERS’ coal policy lags far behind that of many other institutional investors. The fund’s coal investments have lost value, and global economic and policy trends indicate that investments in the coal sector are unlikely to prove profitable in the future. The report’s authors question why the fund is continuing to invest in an unprofitable industry that the California State Legislature has identified for divestment, and the International Panel on Climate Change (IPCC) has indicated must be phased out entirely by 2050 to ensure a livable planet.
CalPERS is the largest state public pension fund in the US. It recently made national headlines when its Chief Investment Officer, Ben Meng, resigned over allegations of possible conflicts of interest. The fund serves more than 1.9 million members in its public employee retirement system, and administers benefits for 1.5 million members and their families. It has approximately $409B in assets under management.
Fossil Free California is a 501c3 grassroots non-profit, focused on moving money out of fossil fuels and supporting a just transition to a clean energy economy that works for everyone.
“In 2020, we should be discussing the particulars of our just and equitable transition off fossil fuels. Instead, we’re still shaking our heads at how our public institutions continue to lose money by investing in the dirtiest energy source on the planet. I’m not sure what else CalPERS needs to stop fueling the literal fires with their coal investments. We hope the board wakes up soon — it is long past time to divest from fossil fuels.”
– Brett Fleishman, Fossil Finance Campaigns Associate Director, 350.org
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“SB185 covers only the smallest percentage of the coal value chain. As written, the law has a coal-truck-sized loophole in it — but CalPERS hasn’t just driven through that loophole, they’ve driven around it. California’s public employees depend on CalPERS to invest their fund responsibly. Investing $6.5 billion in coal, when our state is on fire and the economy is in shambles, is totally irresponsible – and a violation of the board’s fiduciary duty.
– Vanessa Warheit, Executive Director of Fossil Free California and co-author of the report
“Did CalPERS staff decide to increase its investments in Exxaro without consulting the board? Did the CalPERS Board exercise its fiduciary duty as to companies subject to SB185 in a closed session? Who is minding the store? Retirees are depending on CalPERS to make sound decisions on our behalf. How can investing in this dying industry meet the Board’s fiduciary responsibility? I want to hear the Board explain this in a public meeting. The record temperatures and shrouds of smoke we Californians are experiencing underscore the urgency of reducing emissions as fast as humanly possible and ending the CalPERS’ relationship with the dirtiest of all fossil fuels immediately.”
– Sara Theiss, CalPERS retiree and member of Fossil Free California
“CalPERS must exclude companies like Exxaro from their portfolio if they are serious about their divestment commitment. Exxaro generates 99% of its revenue from coal operations which are violating environmental rights in places like my community, near Exxaro’s Grootgeluk mine. The company has failed to comply with water use licences, leaving entire communities without access to clean water. They pretend to be solving climate change by claiming to be shifting to clean energy, instead they continue to ignore air pollution standards, destroying our quality of life.”
– Francina Nkosi, Coordinator, Women Affected By Mining United In Action (WAMUA)
Fossil Free California works to end financial support for climate-damaging fossil fuels and promote a just transition to a low-carbon economy. www.fossilfreeca.org