The past few weeks have seen a flurry of activity from divestment advocates across the country.
In California, the state Assembly passed AB 20, which is designed to pressure the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) to divest from the already operational Dakota Access Pipeline (DAPL). If successful, the bill would affect $4 billion worth of assets in CalPERS alone. Both pension funds have opposed the measure, with CalPERS stating that “there is considerable evidence that divesting is an ineffective strategy for achieving social or political goals.”
In San Francisco, the trustees of the San Francisco Employees’ Retirement System (SFERS) will meet to discuss the possibility of divesting from traditional energy stocks. This debate will take place in the shadow of an analysis published by Bloomberg, which announced that the net pension liability of the fund nearly doubled in 2016 to $5.5 billion.
In New York, State Comptroller Thomas DiNapoli has pushed back on the idea that one has to be pro-divestment to be pro-environment, refusing to take up the issue of divesting the state’s pension funds. “We believe in engagement with companies, and at this point we have no plans to divest completely,” DiNapoli said in an interview.
All of these debates continue as a recent report, compiled by Professor Daniel Fischel of the University of Chicago, took a look at the potential consequences of divestment by some of the top funds in the country, including California, San Francisco, and New York. The report calculated annual losses ranging from $324-431 million for the top 11 funds. Over 50 years, CalPERS would lose a staggering $2.3-$3.14 trillion, while San Francisco would lose $149.4-$201.7 billion.
It is clear that using the retirement funds of hard-working teachers, police officers, or firefighters is not the proper way to help the environment. The losses incurred by divestment would drain more tax dollars that could be used to spur real change, like incentivizing solar power, constructing car-free transportation options, or investing in new water infrastructure. Politicians need to look past taking actions that merely grab the headlines and to put in the work that will make a real difference in the long run.