Fossil fuels are not always profitable. Take the California Public Employees' Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS), the Golden State’s largest public pension funds, for example. They have lost over $5 billion on fossil fuel investments during the past fiscal year, according to a report by Trillium Asset Management.
Let’s first look at the coal investments. The two pension funds lost a combined $840 million from stock investments in the world’s largest coal companies during the fiscal year that ended June 30. That’s a lot of public investment to lose on a very dirty fuel. Trillium’s analysis indicates that BHP Bilton demonstrated the biggest dollar decreases at both pension funds.
When Trillium expanded the analysis to include the world’s 200 largest oil, gas and coal companies by carbon reserve, it came to the combined $5.1 billion estimated loss. That amounts to a 25 percent decrease in the pension funds’ coal stocks during the 12-month period. However, other stock investments by both pension funds increased.
"Fossil fuel stocks are volatile investments,” said Matthew Patsky, CEO of Trillium Asset Management. “Investors and fiduciaries should take this moment to reassess their financial involvement in carbon pollution, climate disruption and the financial risk fossil fuels plays in their portfolio.”
“These freshly incurred losses starkly demonstrate coal’s financial risk, and illustrate the potential benefits of SB 185 to California pensioners,” said Will Lana, partner at Trillium Asset Management.
By Jan. 1, 2017, both boards of CalPERS and CalSTRS would be required to file a report with the state legislature and the governor. The report would cover actions the pension funds have taken to divest from coal and recommendations to ensure the board is acting consistently with its fiduciary responsibilities. In addition, it would include a comprehensive assessment of the feasibility of divesting other fossil fuel investment funds such as natural gas and petroleum.
There are several reasons why the bill’s authors want the pension funds to divest from coal:
“This bill is the right thing to do from both the economic and social perspective,” bill co-author, State Sen. Jerry Hill (D-San Mateo) told the San Francisco Chronicle. “We should be moving to sources of energy, and investments, that are socially responsible and will take us from the 20th century and into the 21st.”
Image credit: Flickr/Kim Scarborough
Gina-Marie is a freelance writer and journalist armed with a degree in journalism, and a passion for social justice, including the environment and sustainability. She writes for various websites, and has made the 75+ Environmentalists to Follow list by Mashable.com.