SACRAMENTO, Calif. -- The California State Teachers' Retirement System has adopted a broad divestment policy to help the $114 billion fund decide whether to sell investments in any industry whose economic viability is at risk.
The policy sets the stage for a June 7 vote as to whether CalSTRS should shed its $339 million in tobacco stocks.
Under the new policy, CalSTRS will be able to modify its benchmark when there is a more cost efficient option available, such as one that would incur lower trading costs.
Alternatively, CalSTRS could modify its benchmark when an industry or sector's economic viability is in doubt. An affected industry would have to meet at least three of four indicators:
* when the industry shares combined exposure to product liability judgments that potentially top its collective net worth;
* when there's a significant threat of industry-wide bankruptcy filings;
* when regulatory and/or legislative actions have the potential to substantially impair earnings; and
* when actions taken by institutional investors collectively have the potential to drive down share prices.
