California Gov. Edmund G. “Jerry” Brown Jr. signed into law Thursday a bill that requires CalPERS and CalSTRS to divest from investments in coal companies, he announced on his website.
The law mandates that the $291 billion California Public Employees’ Retirement System, Sacramento, and the $184 billion California State Teachers’ Retirement System, West Sacramento, liquidate holdings in thermal coal companies by July 1, 2017.
In April, CalPERS’ investment committee approved the investment staff’s recommendation to take no official position on the legislation.
In a news release on Friday, CalPERS said it will begin to engage with the approximately 27 thermal coal companies whose holdings comprise about $57 million in plan assets as of June 30. This is the first step required by the new law.
"We applaud Sen. (Kevin) de Leon and Governor Brown for their commitment and attention to this important issue," added Anne Stausbol, CalPERS’ CEO, in the news release. "CalPERS has been at the forefront of tackling climate change issues through policy advocacy, engagement with portfolio companies and investing in climate change solutions. We remain committed to encouraging our investment managers, portfolio companies and policymakers to engage in responsible environmental practices as part of our duty as a principled and effective investor."
Ms. Stausbol is also co-chair of the board of Ceres, a coalition of environmental groups, investors and non-profit organizations advocating for sustainable business practices.
Ricardo Duran, CalSTRS spokesman, said in an e-mail that the pension fund began to evaluate its holdings in thermal coal in April at the direction of its investment committee to determine its extent within the investment portfolio and the fiduciary impact of its possible removal.
As of Sept. 30, CalSTRS’ holdings in thermal coal were valued at roughly $6.7 million, Mr. Duran said.
“The impact of the newly signed law on CalSTRS’ $184 billion portfolio is expected to be minimal,” he added.
