Two California divestment bills, one that would have required CalPERS and CalSTRS to divest from fossil fuels and another from companies with business operations in Russia or Belarus are dead for this session after an Assembly committee chairman declined to schedule the bills for hearings.
Assembly Member Jim Cooper, chairman of the Assembly Public Employment and Retirement Committee said in a news release that he decided to hold both bills, which were expected to be heard by his committee this week, because he opposes any measure that would require the $433.3 billion California Public Employees' Retirement System, Sacramento, and $314.8 billion California State Teachers' Retirement System, West Sacramento, to divest from a particular entity or industry.
"Previous legislative divestment requirements have resulted in long-term negative financial effects on California's pension systems," Mr. Cooper said in the news release.
One of the bills would have prevented CalPERS and CalSTRS from making new investments in fossil fuel companies. Both bills passed the state Senate but cannot progress further without being heard in Mr. Cooper's committee. CalPERS and CalSTRS opposed both bills. Officials from both pension plans said they prefer engagement with fossil fuel companies over divestment.
CalPERS opposed the Russia and Belarus divestment bill because it went further than the U.S. sanctions against Russia, among other reasons. CalSTRS opposed the Russia and Belarus divestment bill due to its policy to oppose legislation that restricts its ability to invest in specific areas because those restrictions could hinder the board’s ability to exercise its fiduciary duty.
Rebecca Foree, CalSTRS spokeswoman, said in an email that "climate change is about more than fossil fuel companies; our entire investment portfolio is affected by climate risk."
CalSTRS' approach is "more holistic," she said. CalSTRS' approach "includes measuring emissions, engaging directly with companies, working to expand government policies, and investing in solutions," Ms. Foree said.
CalPERS declined to comment on either bill.
Fossil Free California, which had sponsored the fossil fuel investment bill, will seek to have it reintroduced next session, said spokeswoman CJ Koepp said.
"While the bill's progress has been cut short this session, we'll be back with similar legislation next year and are turning up the pressure directly on CalPERS and CalSTRS to live up to their fiduciary duty," Ms. Koepp said in an email.