February 22,2022 By Ramona du Houx On February 17, Senator Lena A. Gonzalez (photo at the right) introduced the Fossil Fuel Divestment Act, SB-1173, in the California state legislature. The bill, co-sponsored by Sen. Scott Wiener, would mandate that California’s public pension funds stop investments in fossil fuel companies. Specifically, the legislation would give the California Public Employees’ Retirement System […]
On February 17, Senator Lena A. Gonzalez (photo at the right) introduced the Fossil Fuel Divestment Act, SB-1173, in the California state legislature.
The bill, co-sponsored by Sen. Scott Wiener, would mandate that California’s public pension funds stop investments in fossil fuel companies.
Specifically, the legislation would give the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) until July 2027 to divest a combined $9.9 billion from the Carbon Underground 200, a list of companies considered to have the greatest potential for future fossil fuel emissions from their reserves and prohibit any new investments in those companies.
“On behalf of 430 elected officials from 49 counties working to phase out dangerous oil and gas drilling, EOPA California congratulates Sen. Gonzalez and Sen. Wiener for their bold leadership with their bill proposing to divest these state pension funds from fossil fuel companies, which continue to devastate communities of color disproportionately with toxic pollutants that can lead to premature death,” said Christian Brock, CEO of Elected Officials to Protect America, Air Force Veteran, CA. “California must live up to its reputation of being a climate leader and stop this double standard by ending all investments in fossil fuels and investing in clean energy solutions like offshore wind to ensure our clean energy independence. Environmental justice means CA must protect the environment and the health and future of all Californians, not just for some.”
CalPERS and CalSTRS are the two largest public pension funds in the United States.
Many of these pension fund beneficiaries experience severe health impacts every day because they live near fossil fuel extraction operations. With divestment, the earnings of nearly 3 million active and retired public school teachers, college instructors, state and local employees, the health and wellbeing of all Californians would benefit.
For over eight years, teachers, students, and state workers have called for their pensions to be divested from fossil fuels. It’s time for the Legislature to act.
“I’m not sure which is more insane: an out-of-control fossil fuel industry whose long-term financial plan seems to be incinerating its customer base through global warming or governmental pension funds who keep investing in them,” said Los Angeles City Councilmember Paul Koretz, EOPA California Leadership Council. “When I was in the State legislature, divestment of CalPERS and CalSTRS was off the table. Its time is now.”
Other states legislatures, Maine and New York, have moved on divestment with success. In Maine, a law passed in 2021 requires the fund to divest from fossil fuel companies by 2026, as long as doing so is “in accordance with sound investment criteria and consistent with fiduciary obligations.”
“We must do everything within our power to mitigate the climate crisis, and advance environmental justice — while paving the way for good-paying, union jobs. A major step Maine took was to codify fossil fuel divestment through the legislature. We were the first state to do so, and our very own Unity College was the first educational institution to do it—leading the way,” said Alex Cornell du Houx, former Maine state Representative, Marine combat veteran, President of the Elected Officials to Protect America and Co-Founder. “The CA combined pension fund’s $9.9 billion dollars could be invested in countless clean energy projects, progress environmental justice and help the just transition of those working in the fossil fuel industries. This is a historic opportunity for California, one long in the making. If Maine could do it, the fifth largest economy in America can too.”
SB-1173, has precedent in CA state legislation passed in 2015 that required CalPERS and CalSTRS to divest from companies with substantial earnings from coal. Additionally, Gov. Gavin Newsom, called for investments to focus on industries that reduce carbon emissions and are adapting to climate change, while still aligning with the public pension funds’ fiduciary responsibilities in his Executive Order 19-19, issued in 2019.
That kind of momentum led to action in New York.
“I was privileged to sponsor the divestment proposal in the New York State Assembly. Because of the momentum we had that ensured we would win the final vote, New York Comptroller Thomas DiNapoli, who oversees retirement assets, came to the negotiating table and took the necessary divestment measures without the necessity of codifying it into law. Without the Assembly and thousands of activists the outcome could have been different. DiNapoli listened,” said Felix Ortiz, New York State former Assembly Assistant to the Speaker, Army Veteran, Elected Officials to Protect America Leadership Council. “With the coalition Sen. Gonzalez and Wiener have assembled, I have no doubt California will embrace this unique opportunity to progress environmental justice, protect pensioners and live up to its reputation as a climate leader.”
“I believe the appetite is there. We’ve seen it in New York and Maine and worldwide, ” said Senator Lena Gonzalez (D – Long Beach) author of the bill when asked how she gagged if its time had come, during her online press conference.
The issue is personal for her because her Long Beach community has been called, “toxic asthma avenue.” The devastating amounts of pollutants that oil and gas companies spew into communities is unconscionable and tragic for all who have to breath the toxic air.
“As a leader in the fight against climate change, California must align the investment choices we make with our moral and environmental goals,” said Senator Gonzalez. “Investing billions in the fossil fuel companies that are polluting our environment while at the same time trying to meet ambitious emissions reduction goals is contradictory and incongruous. SB 1173 will ensure we remain true to our values and honor our commitment as a State to protecting the environment and the health and future of all Californians, including historically disadvantaged communities of color that are disproportionately impacted by the hazardous pollutants released into our communities by these companies.”
Divesting CalPERS and CalSTRS from fossil fuels would serve their beneficiaries’ best interest, while mitigating the climate crisis.
“These pension funds are attempting to leverage their massive influence by engaging with the fossil fuel industry – but by doing so, they are giving tacit support to these companies and enabling them to continue to do what they do best: extract toxic energy, destroy our communities, and delay a transition to clean energy for all,” said Miriam Eide, Coordinating Director at Fossil Free California. “By divesting from fossil fuels, the Boards of these pension funds would use their power to revoke the social license of the fossil fuel industry to poison our communities, destroy our climate, and avoid accountability.”
The University of California and California State University systems, the states of Maine and New York, New York City, the province of Quebec, the Vatican, Unitarian Church, and World Council of Churches have made similar announcements.