According to publicly available sources, the nation’s largest state employee pension fund, the California Public Employees’ Retirement System (CalPERS), is ready to reaffirm its commitment to responsible investing, and approve a “fundwide policy” to oppose divestment, according to E&E News.
CalPERS has worked hard to uphold its reputation as a responsible investor, and the new policy will uphold and name corporate engagement as the “preferred approach”. As CalPERS Chief Operating Investment Officer Wylie Tollette stated last week when speaking to the editorial board of the Sacramento Bee, “when you divest, you basically take our voice out of the debate.”
CalPERS doesn’t just talk the talk when it comes to engaging companies it owns shares in, but they follow through as well. Earlier this year, CalPERS announced their intention to be active in multiple proxy efforts to be more transparent on the environment. Other pension-management veterans, such as former Oregon Treasurer Ted Wheeler, and Christianna Wood, a former CalPERS senior fund manager, named corporate engagement as the right strategy for stockholders investors and other affected stakeholders to work towards a cleaner environment.
In a very candid assessment of divestment, CalPERS stated:
(…) there appears to be 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. Investors that divest lose their ability as shareowners to influence the company to act responsibly.
CalPERS assets are currently a source of debate due to introduction of multiple divestment bills into the state legislature, including Assembly Bill (AB) 20, which would force the fund to divest from the Dakota Access Pipeline, and several major banking institutions that helped finance the project. According to an estimate, AB 20 would affect around $4 billion in CalPERS assets if it became law. In addition to CalPERS officials themselves, the bill earned the opposition of the editorial board of The Los Angeles Times, which called the bill “ill-considered” and “attention-getting.”
Read the full article here.