CalPERS and CalSTRS would be required to divest their holdings in companies that produce coal under a bill to be introduced by the leader of the state Senate.
Senate President Pro Tem Kevin de Leon said he will introduce legislation in January to order the $295.7 billion California Public Employees' Retirement System, Sacramento, and $187.1 billion California State Teachers' Retirement System, West Sacramento, to begin to divest completely from coal.
CalPERS had about $45.9 million in coal and consumable fuels holdings as of Sept. 30, according to data compiled by Bloomberg. Its largest holdings were in Consol Energy, $19.4 million; Peabody Energy, $7.2 million; and Alliance Resources Partners, $5.2 million, the data show.
“California is leading globally on climate change and clean energy, and our shared financial resources should reflect that,” Mr. de Leon said in remarks prepared for delivery Monday at a climate conference in Oakland. “California has prohibited its energy companies from buying or importing coal power, and the state's funds should match that.”
The measure, if passed by lawmakers and signed into law by Gov. Jerry Brown, would make CalPERS the largest pension fund to end investment in coal. Stanford University in May announced its $21.4 billion endowment would no longer make direct investments in coal companies.
Brad Pacheco, a spokesman for CalPERS, said engagement with companies is the most effective form of communicating concerns over climate change issues.
“We look forward to continuing a meaningful dialogue with experts and stakeholders,” Mr. Pacheco said in a statement.
A divestment movement has spread to hundreds of college campuses across the U.S. in the past two years, though few have altered their policies. Harvard University, the world's richest university, has declined repeated calls by students and faculty to sell its holdings of fossil-fuel companies. Brown University also declined to divest from coal companies after a student campaign.