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CalSTRS divesting from non-U.S. thermal coal companies

Decision comes more than a year after exiting U.S. coal holdings

CalSTRS' investment committee approved divesting all non-U.S. thermal coal holdings by July 1.

Only about $8.3 million of CalSTRS' portfolio is exposed to non-U.S. thermal coal companies through three companies: PT Adaro Energy, Exxaro Resources Ltd. and Whitehaven Coal Ltd.

The committee's vote Wednesday follows a February 2016 vote in which the investment committee voted to divest U.S. thermal coal holdings.

State lawmakers had put divestment by CalSTRS and the $322.3 billion California Public Employees' Retirement System, Sacramento, in motion in 2015, by requiring divestment if engagement with coal companies for more environmentally sensitive polices were not implemented.

But the legislation also gave the pension fund an out, to avoid divestment, if their analysis shows their investment returns would be hurt by excluding securities from their portfolio.

CalPERS has taken no action on divesting from thermal coal companies in either the U.S. or abroad.

At an April 18 CalPERS investment committee meeting, members approved a resolution to generally prohibit divestment.

CalPERS spokeswoman Megan White said the investment committee last month discussed the divestment legislation in closed session. She said she could not offer additional details.

The investment committee of the $206.5 billion California State Teachers' Retirement System, West Sacramento, acted to ban non-U.S thermal coal companies even though a staff memo did not make a recommendation for or against divestment.

The memo noted that while thermal coal companies increase greenhouse gases, coal energy production was important to developing countries like India in meeting energy needs.

Investment committee member Betty T. Yee, who is also the state controller, applauded the CalSTRS vote in a statement.

“The regulatory and risk and environmental impacts climate change places on the fund far outweighs the ability of thermal coal companies to continue to create long-term value,” she said.