California state pension funds to divest from coal

CalPERS and CalSTRS will sell up to US$240 million in mine holdings after lawmakers’ decision, in win for campaigners

The buck rests with Governor Jerry Brown (Flickr/ Steve Rhodes)

Jerry Brown, the Governor of the world’s eighth-largest economy (Flickr/ Steve Rhodes)

By Megan Darby

California’s two largest public pension funds are set to ditch coal holdings after a state assembly vote on Wednesday.

Lawmakers backed the “investing with values and responsibility” bill by 43-27, as part of the state’s push to tackle climate change. Governor Jerry Brown is expected to rubber stamp the law in the next few days.

Worth a combined US$500 billion, CalPERS and CalSTRS will become the first US funds to divest on such a large scale.

“Coal is losing value quickly and investing in coal is a losing proposition for our retirees; it’s a nuisance to public health; and it’s inconsistent with our values as a state on the forefront of efforts to address global climate change,” said Kevin de Leon, the state’s Democratic senate leader.

“California’s utilities are phasing out coal, and it’s time our pension funds did the same.”

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Under the bill, the pension providers must sell shares in companies that get half their revenue or more from mining “thermal” coal – the kind used in power generation.

Calpers has investments worth US$100-200 million meeting that definition, it said, including stakes in Peabody Energy and Arch Coal. For CalSTRS, the figure is around $40m.

Campaigners hailed the decision.

“This is a big moment for California, and for everyone around the world standing up to the most powerful and destructive industry in history,” said May Boeve, executive director of 350.org.

“Today’s vote is so meaningful because it sends a strong message: political leadership on climate change means being willing to stand up to powerful moneyed interests, and call out the destructive practices of the companies causing the climate crisis.”

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Scientists have calculated more than 80% of known coal reserves worldwide cannot be burned if the global warming is to be held to 2C.

Half of natural gas and a third of oil also needs to stay in the ground, they found, to meet the international climate goal.

Yet energy majors continue to base their business plans on rising fossil fuel demand growth. Some are engaged in high cost ventures, such as Arctic exploration, that analysts say cannot pay off in a 2C world.

Boeve called on California to go further, divesting from oil and gas and banning shale gas fracking.

California took a slightly looser definition of coal company than adopted by Norway’s oil fund, the biggest globally to divest so far.

Norwegian lawmakers agreed to withdraw finance from firms that get more than 30% of revenues from mining. It also targeted power companies that generate more 30% of their output from coal. The total value at stake was estimated at $8 billion.

Report: Banks urged to halt coal finance before Paris summit

Meanwhile, six ethical banks with assets exceeding €15 billion from Bolivia, Germany, Netherlands, Sweden and the US have pledged to stop financing coal.

ASN Bank, Banco Fie, Ekobanken, New Resource Bank, Ethikbank and Umweltbank signed the Paris Pledge.

Advocacy group Bank Track is encouraging other private banks to take that step ahead of a critical climate change summit in Paris this December.

Read more on: Climate Finance | Climate Politics | Divestment | US | |