Fossil fuel-funded cop kills California climate fossil fuel divestment bill
June 22, 2022
It is legally sound and fiscally right. And it is no longer novel. With a decade of data, more than 1500 institutions representing over $40 trillion in assets have committed to some form of divestment. These include very large, mainstream banks, insurance companies and pension funds. New York State, New York City, Washington DC, Chicago, Baltimore, Minnesota, San Mateo County, Los Angeles are all US examples of public pension funds that have implemented or are pursuing divestment.
Despite broad support from Californians to divest the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) from climate chaos, Assemblymember Jim Cooper stood with fossil fuel and corporate interest — refusing to even give California’s fossil fuel divestment bill (SB 1173) a proper hearing.
One legislator having the enormous power to effectively stop a bill from even being voted on is a travesty to the American democratic system. This is not the system that claims to embrace the will of the people, this is a clear example of how the oil and gas industry buys political power and subverts the very principles on which our democracy is based.
Amidst a historic mega-drought, wildfires, and fossil-fueled public health crises, Cooper, Chair of the Assembly Committee on Public Employment and Retirement, refused to allow Senate Bill 1173, California’s Fossil Fuel Divestment Act, to be heard in his committee. This one-man veto allows the state’s pensions to continue to invest billions from public funds into the fossil fuel industry — for now.
This decision is a moral failure that disproportionately impacts young people, Indigenous communities, communities of color, and low-income communities.
Climate chaos has already cost California billions in damages and health costs from fossil fuel pollution and climate disasters. Jim Cooper, who has just been elected Sacramento County Sheriff, has reported $36,350 in Big Oil campaign contributions from this election season alone. Previous campaign contributions show $218,000 from the oil and gas industry. This paints a clear picture of who has influence over an elected official who is supposed to represent the people not corporations.
Last year, Maine became the first state in the US to pass comprehensive divestment legislation, directing its state treasury and state pension fund to divest from all fossil fuels, including private equity funds. This bill was deemed fiduciary and legally sound, and embraced by the Maine legislature. Notably, the University of California system, one of the largest in the country, has completed divestment of both its endowment and pension funds — valued at over $130 billion — citing growing financial risk of coal, oil, and gas holdings
These examples speak to the mainstream regard of fossil fuels by funds and institutions that have a fiduciary requirement to invest for the long term in a prudent manner.
Just a few months ago, in announcing the divestment of New York State’s Common Retirement Fund, the third largest in the country, from 22 shale oil and gas companies valued at $320 million, New York State Comptroller Tom DiNapoli said:
“As market forces and new policies drive the energy transition, we must align our investments with a profitable and dynamic future. The shale oil and gas industry faces numerous obstacles going forward that pose risks to its financial performance. To protect the state pension fund, we are restricting investments in companies that we believe are unprepared to adapt to a low-carbon future”.
This clear and simple statement speaks volumes about the approach that California — and pension funds across North America and around the world — must take in regards to its investments in fossil fuels.
In the face of the climate crisis UN Secretary-General António Guterres recently told the world “investing in new fossil fuels infrastructure is moral and economic madness.”
It is time for CalPERS, CalSTRS, and Californian elected officials to heed these glaring warnings.
California finds itself at a key moment: when the economics of the fossil industry are structurally declining in the long term investing horizon of pension funds; when climate science has never been clearer; when the impacts of fossil fuels companies on frontline and BIPOC communities are well-known and documented; when viable, investable alternatives exist; and when dozens of other pensions have already broken the ground.
Multiple studies and reports from divested institutions have shown the financial benefits of fossil fuel divestment.
The most striking was a report issued last year by BlackRock, the world’s largest investment house, under commission to New York City’s comptroller and pension funds.
It looked at a wide range of divested funds and found that none of them“found significant negative performance from divestment but rather, have reported neutral to positive results,” adding that divestment “outperforms all other options.”
Other parts of the report reveal fossil fuel stocks “consistently underperformed the broader market over the past five years,” warning of the danger of fossil fuel holdings tanking as the world transitions to renewable energy. BlackRock also noted that the costs to divest were negligible and could be done in the normal and regular course of rebalancing investments.
Not only do these reports prove how financially sound it is to divest, a recent report shows that both of California’s Pension funds lost more than $19 Billion over the last ten years by staying invested in fossil fuels. They could have gained a respective $11.9 and $5.5 billion in revenue.
CalPERS and CalSTRS have repeatedly provided imprecise, incorrect and inflated figures on the cost of divestment, arguing instead for shareholder engagement to keep a seat at the table. Yet a comprehensive report from Fossil Free California revealed that CalPERS and CalSTRS used their influence as shareholders to obstruct climate action at major fossil fuel corporations, including BP and Shell, as well as financial institutions around the world.
While SB 1173 did not pass the legislature this year, we will be back supporting Californians next year with similar legislation.
California still has the opportunity to divest the country’s two largest pension funds, and protect the retirement future for first responders, teachers and public employees.
At a time when frontline communities cannot afford anymore lip service, it’s devastating that fossil fuel and corporate interest blocked this crucial legislation through committee. We cannot allow fossil fuel financing and legislators’ delay tactics to wreak any more havoc on our climate.
Frontline communities won’t wait for lawmakers to appease the fossil fuel executives while our homes burn and flood, while our bodies are polluted and our children’s futures are destroyed for profit. This isn’t the end of this fight.