The bill's author is "very committed," Ms. Frost said.
The measure would mean that the $458.9 billion CalPERS would have to shed about $9.4 billion in fossil fuel holdings, which would be its largest-ever divestment, and as of Jan. 1, CalPERS would no longer be able to invest capital in fossil fuel-related assets, Ms. Frost said. CalPERS would also lose the opportunity as a shareholder to engage with companies to push them along on their energy transition journeys, Ms. Frost said.
At a June board meeting, Ms. Frost told members that the divestment would result in an estimated 4.4-basis-point hit to returns per year to the plan over 10 years. Over a 20-year period, CalPERS estimates that fossil fuel divestment would result in a 3.6 basis points annual decline, amounting to $327.6 million per year.
Officials at CalPERS as well as the $309.3 billion California State Teachers' Retirement System, West Sacramento, which also would have to divest from fossil fuels, have taken part in "education tours," speaking with legislators and explaining why divestment is not the right way, Ms. Frost said during her talk at the conference with Nikki Pirrello, P&I's president and publisher. The two pension funds oppose the bill.
The bill has so far passed the Senate and next year the bill will pick up where it left off in the state Assembly's Public Employment and Retirement Committee. In the interim, the committee members are expected to engage with labor groups as well as CalPERS and CalSTRS about the bill, Ms. Frost said.
As a two-year bill, the measure will not need to be reintroduced.