I am not convinced that divestment is the best approach. The sheer volume of energy and magnitude of pension assets that needs to be replaced is simply too great. The better alternative is engagement.
The California Public Employees’ Retirement System and the California State Teachers’ Retirement System collectively hold about $492 billion in assets. I want the companies in which the funds invest to be preparing for a carbon-free future.
I see the potential for swaying corporate behavior in ways that will ease the transition to a green-energy economy.
Both pension funds ask companies – even those with only a peripheral connection to fossil fuels – to examine the long-term business risks from climate change and to take action accordingly. How will climate change disrupt the way they do business? Have they assessed the risks and disclosed them? How can they change to survive and thrive in the new energy environment and economy?
The pension funds also need alternatives to investing in traditional fossil-fuel enterprises – no-carbon and low-carbon index funds with proven track records that ultimately can help them divest naturally when the business climate dictates and the transition to cleaner energy has taken hold. This is our fiduciary responsibility to the 2.5 million pension-fund beneficiaries who rely on the retirement benefits they earned while serving as public-sector workers and educators.
The question is not whether we will move to depend less on fossil fuels – the question is how quickly.
State Controller Betty Yee