California Pension Boards Remain Firmly Committed to Engagement

The California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) were recognized by the Financial Times for their commitment to corporate engagement in a recent article concerning divestment.

CalPERS recently voted to reject divestment as a preferred tool for social change, arguing that “divesting appears to almost invariably harm investment performance.” Instead the new CalPERS policy “prohibits Divesting in response to Divestment Initiatives, but permits CalPERS to use constructive engagement.”

The divestment campaign to disengage from the Dakota Access Pipeline (DAPL) is doubly ineffective, since the pipeline project has already been built, and is scheduled to start delivering oil from the Bakken to processing plants soon. The Los Angeles Times editorial board recognized that fact when they spoke out against DAPL divestment bill AB 20, stating that divesting from DAPL would be an “empty gesture” that “wouldn’t stop the
project from being completed” while blowing “a multibillion-dollar hole in the pension funds.”

Meanwhile, CalPERS has decided to use its status as a shareholder, and advocate for proposals in the companies that it has stocks in, such as Humana, FirstEnergy, and Southern Co.. After all, as CalPERS COIO Wylie Tollette has said, “when you divest, you take your voice out of the debate.”

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