With several divestment bills before the California Legislature, increasingly urgent calls to leave pension funds alone have been reported in the state media. Just recently, Carlos Solorzano, the CEO of The Hispanic Chambers of Commerce of San Francisco pushed back against divestment bill AB 20, making the case that the legislation will be harmful to businesses in San Francisco and across the state. The editorial board of The Press Democrat, of Santa Rosa, also strongly objected to pensions being used as “a tool for making political statements.”
Following their footsteps, the Orange County Register published a column which stressed the fact that while pension funds lose billions of dollars when divesting, the effects on the targets of these divestment campaigns have been negligible. The column quoted CalSTRS Chief Investment Officer Chris Ailman, who stated:
“I’ve been involved in five divestments for our fund. [On] all five of them we’ve lost money, and all five of them have not brought about social change.”
The column also cited another example of just how ineffective divestment is:
After a CalPERS investment initiative to focus on “clean” energy and technology resulted in a loss of 9.7 percent between 2007 and 2013, former chief investment officer Joseph Dear described the effort as “a noble way to lose money.”
Finally, the Orange County Register columnist concludes with a call to separate politics from investments:
California’s pension systems are already struggling with low funding ratios and a long-term investment outlook that has already forced them to lower their annual investment return assumptions multiple times in recent years. It is time for a separation of investment and state.
Read the complete column here.