The investment committee of the $190.8 billion California State Teachers' Retirement System, West Sacramento, on Friday approved a plan to direct investment staff to study whether to divest CalSTRS' investments in coal companies.
Several major institutional investors, the most prominent to date being Stanford University's endowment, have divested coal holdings, but so far no major U.S. public pension fund has taken such action.
CalSTRS' approval launches a four- to eight-month study. Chief Investment Officer Christopher Ailman made it clear that he is against divestment of securities in general, saying the fund doesn't have a seat at the table when it divests. “The effects of divestment silence us,” he said.
Mr. Ailman told the investment committee that he wasn't taking a specific position on the coal divestment. He said CalSTRS has previously enacted divestment strategies five times in dealing with investments in South Africa, Iran, Sudan, tobacco and firearms. Each time has resulted in investment losses, he added. The staff study will look at how risky it is for CalSTRS to continue investing in coal companies.
CalSTRS has about $40 million invested in 12 coal-company stocks. The resolution would affect only thermal coal companies; thermal coal is used for energy production. CalSTRS' action to study divestment comes as California state Senate President Pro Tem Kevin de Leon has introduced legislation to direct both CalSTRS and the $301.7 billion California Public Employees' Retirement System, Sacramento, to divest of any investments in thermal coal companies.