Panel expected to consider issue next year
CalPERS' investment committee on Monday voted against scheduling an April vote on board member and California Treasurer John Chiang's proposal that the $355.4 billion pension plan divest from wholesale and retail sellers of military-style assault rifles and bump stocks.
Instead, the investment committee for the California Public Employees' Retirement System, Sacramento, is expected to discuss the topic of gun divestment next year.
Mr. Chiang made the motion after the investment committee heard public comments on the issue, including a number of people whose family members had been killed in San Bernardino, Calif., and other incidents of gun violence.
Before the vote, board member Theresa Taylor applauded the speakers for coming before the board. "I can't imagine what everyone has gone through," Ms. Taylor said. However, she added, "We do have a divestment policy that states that we generally don't divest. ... If we are divesting, we lose our seat at the table."
Ms. Taylor noted that CalPERS officials would not have been able to get four companies out of the five the staff had identified as companies that had sold assault rifles or bump stocks — which turn semiautomatic weapons into automatic weapons — to promise to stop selling weapons, which are against California law.
During the discussion of his motion, Mr. Chiang said the board has the responsibility to optimize the pension plan's risk-adjusted returns.
"No one is talking about risk," he said. "If we don't take action here, nobody would take us seriously on engagement" if they did not believe that CalPERS could divest its holdings.
Before the vote, CalPERS Chief Investment Officer Theodore Eliopoulos said the staff would not have time to complete the necessary analysis in time for an April gun divestment vote because the agenda materials are due in two weeks.
Separately, in response to a query about market volatility from a investment committee member Richard Costigan, Mr. Eliopoulos said he expects there to be more market volatility this year and for years to come because central banks around the world, including in the U.S., are reducing quantitative easing in the next one to two years. And that will occur just at the time when valuations are rising. At the same time, the U.S. is in the late stages of an economic recovery and the federal government is stimulating the economy with measures including the new tax law.
At no time in history has there been the same group of factors, Mr. Eliopoulos told the investment committee.
In a report on environmental, social and governance factors, Daniel E. Ingram, vice president, of Wilshire Consulting, CalPERS consultant, noted that CalPERS can expect to save $14.8 million in the 2018 fiscal year from 20 renovation projects in the pension fund's real estate energy optimization program. CalPERS asked its money managers to submit project proposals that focused on gathering information about how different energy optimization considerations have been factored into the renovations' design and expected energy savings.