Around this time last year, State Senator Lena Gonzalez, along with other state senators, introduced Senate Bill (SB) 252 Public Retirement Systems: Fossil Fuels: Divestment. This bill would prohibit public employee retirement funds from investing in fossil fuel companies as well as liquidating all investments in those companies on or before July 1, 2031.
The bill specifically targets the California Public Employees’ Retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS) who currently have around $15 billion invested into the largest fossil fuel companies around the world such as Shell and Chevron.
Currently, the California State University system, including California State University, Monterey Bay, offers CalPERS as its main retirement plan to eligible faculty and staff, including professors.
After SB 252’s introduction, it was successfully passed through the California State Senate and ordered to the California State Assembly. It was later referred to Tina McKinnor, chair of the Assembly Committee on Public Employment and Retirement committee on June 6, when she decided to not hear it out, delaying the bill to this year.
CalPERS is the second largest retirement fund in the United States with an investment portfolio of over $483 billion covering over 2 million retirees. CalSTRS is the third largest fund with over $327 billion in assets.
As California aims to become less reliant on fossil fuels with similar notable bills prohibiting investment and requiring disinvestment into coal companies for these public employee retirement funds, it comes as no surprise that the state has been turning its attention to one of the biggest contributing factors to climate change – oil.
Despite SB 252 failing to pass in 2023, calls for CalPERS to divest in big oil have been fueled for years by climate change activist groups and state worker organizations. There has been immense pressure for the pension to make long-term changes to its investment portfolio.
During a November board meeting, CalPERS announced the “CalPERS’ Sustainable Investments 2030 Strategy,” where they laid out the intentions to create a plan to have a net zero portfolio by 2050 as well as an exit plan for “companies without credible net zero plans.”
During this meeting, there was also a commitment made to invest over “$100 billion toward climate solutions by 2030, and [accelerate] the transition to a low-carbon economy through more selective investments in high emitting sectors.”
While this new plan has been praised for acknowledging the issue and looking into solutions, it has also been criticized for its lack of transparency in the timeline of dates and actions it plans to take. The strategy does not highlight any specific criteria for those “companies with credible net zero plans,” as a part of the investments it plans to exit from, as well as the companies they plan to invest billions of dollars into.
With SB 252 getting a second opportunity to become law this year, there is a lot to be decided, especially regarding who CalPERS invests in for the future.
The Organisation for Economic Co-operation and Development estimates that without new policies, by 2050 there will be a 50 percent increase in global greenhouse gas emissions “primarily due to a 70 percent growth in energy-related CO2 emissions.”