The nation’s second largest pension fund invests in the climate crisis
The kids are mad as hell—and so are teachers who want their California teacher pension fund, CalSTRS, to join 1,000 other institutions collectively divesting $14.5 trillion from the fossil fuel industry that threatens climate catastrophe. The retirement fund divestment fight, led by retired teachers in Fossil Free CA and students from Youth vs Apocalypse and Earth Guardians, estimates CalSTRS’ portfolio investments in fossil fuels at $16 billion, mostly in oil and gas delivery systems, but $6 billion in direct investments in oil behemoths, with $400 million in Exxon-Mobil, $350 million in Chevron, $250 million in BP and $108 million in Enbridge Inc. This is the same corporation sending attack dogs to maul water protectors protesting drilling at river crossings on indigenous land, where Enbridge’s Line 3 pipeline will send sludgy tar sands through Minnesota. The estimated pollution from the pipeline is equivalent to 50 coal powered plants running for 50 years.
Fossil Free CA and other divestment advocates, including this author, warn that CalSTRS, the nation’s second largest pension fund with a $310 billion dollar portfolio, just behind CalPERS’ $444 billion in holdings, risks sticking its members, over 700-thousand active and retired California teachers, with stranded assets—unless the pension fund moves the money before it’s too late, too late for the portfolio, too late for the planet.
Divestment advocates argue now is the time to starve the fossil fuel industry of capital to prevent new oil production.
CalSTRS’s resistance to divestment from Big Oil comes at a financial cost to rank and file public school teachers. In 2019, the Corporate Knights, a Toronto-based research firm, published a study showing that had CalSTRS divested during the last decade the teacher retirement fund would have generated an additional $5.5 billion. Forbes reports that during that same decade, the energy sector of big fossil fuel companies, such as Exxon (ejected from the Dow in 2020), Chevron and BP, shrunk to the smallest investment sector in Standard and Poor’s (S & P) index of the 500 largest US publicly traded companies. This year oil companies underperforming the index saw their credit ratings cut in half.
To put it in teacher terms, Big Oil is not earning a passing fiscal grade.
Divestment advocates argue now is the time to starve the fossil fuel industry of capital to prevent new oil production. Otherwise, the burning of these fuels will heat the Earth higher than 1.5 degrees Celsius, the tipping point for climate catastrophe.
Advocates point to the recent International Energy Agency (IEA) -report “Net Zero by 2050,” in which the world’s energy advisors turn a thumbs down on new oil projects, “The contraction of oil and natural gas production will have far-reaching implications for all the countries and companies that produce these fuels. No new oil and natural gas fields are needed in the net zero pathway …”
By investing in Exxon, Chevron, BP, Occidental Petroleum, Phillips 66, Royal Dutch Shell, and other oil companies, CalSTRS is encouraging new oil production and undermining the IEA.
Ultimately, the decision to divest from fossil fuels lies in the fiduciary hands of CalSTRS’ board members, who have yet to vote for divestment, despite repeated testimony and activism from teachers and middle schoolers at board meetings. On November 6, 2019, the CalSTRS investment committee was recessed for hours after middle school students drove home their divestment message with a protest dance and recording of climate activist Greta Thunberg’s recent speech to the UN. Iman, an 11-year-old member of Earth Guardians Bay Area Crew, told the press, “I live in Richmond right next to the oil refinery. I can see with my own eyes the urgency for closing down fossil fuel companies. We are at the beginning of mass extinction.”
A vociferous opponent of divestment is CalSTRS Chair Harry Keiley, a Santa Monica Malibu teacher who advocates leveraging institutional heft to demand oil companies transition to renewables, a tactic rejected by climate champion former Vice President Al Gore, who testified before the CalSTRS board in April, 2021. “I have been less than impressed with carbon-intensive companies to play a meaningful role in bringing about change,” said Gore.
CalSTRS board member Denise Bradford, the former Chair of the CTA Retirement Committee, joins Keiley in opposing divestment from fossil fuels. Both she and Keiley declined to respond to this writer’s recent emails.
Fiona Ma, California’s State Treasurer, in 2019 joined with students and teachers calling for divestment. This year, CA State School Superintendent Tony Thurmond publicly stated his support for CalSTRS to divest. Betty Yee, California’s State Controller who declared in 2019, “the fossil fuel era is ending,” is a question mark, much like several others on the CalSTRS board.
As summer wildfires swept through Northern California, " target="_blank" rel="noreferrer noopener">students wearing gas masks covered in “oil” (black molasses) marched through downtown Santa Monica, calling on CalSTRS Chair Keiley to support their divestment campaign. Sporting signs that read “Investing in Oil Makes Teachers’ Money Spoil” -- “Harry, you are drowning us in oil” and “CalSTRS funds pipelines,” the students wove their way through the farmers market and Third Street Promenade, chanting, “No more fossil fools.”
In a 7/19/21 OpEd in the Sacramento Business Journal Keiley defends his anti-divestment stance, pointing to CalSTRS' successful nomination and backing of dissidents for the Exxon Board of Directors. "For ExxonMobil, divestment would have taken away our influence and ability to effect change, especially on the board," writes Keiley, adding, when necessary, we escalate our engagement, such as the shareholder-approved proposal we filed with Phillips 66 to report on how the company’s lobbying activities align with the Paris Climate Agreement." Keiley’s point of view reflects CalSTRS’ stated “Perspective on fossil fuel divestment,” posted on the pension fund’s website.
Critics argue CalSTRS’ investments are propping up a dying and deadly industry, even as Chevron boasts of drilling 25 new oil wells worldwide, and Exxon-Mobil undertakes the world’s largest oil production in Guyana, set to release 125 million metric tons of CO2 per year from 2025-2040. "CalSTRS’ insistence on engaging with fossil fuel companies rather than divesting from them comes right out of the industry’s playbook,” says Jane Vosburg, a retired English teacher and co-founder of Fossil Free CA. She adds, “While large parts of the world are burning up and others drowning in floods, the CalSTRS board stays married to Big Oil. What has been the result? Threats to indigenous people’s land at the Dakota Access Pipeline and Enbridge’s Line 3, three new oil executives, including one from Enbridge, on Exxon’s board and billion-dollar losses for teachers.”
The 35,000-strong United Teachers of Los Angeles, the largest union under the umbrella of the California Teachers Association, passed a resolution in 2019 in favor of divestment, but CTA’s Sacramento lobbyist Jennifer Baker has opposed such a move. In 2017, Baker wrote a letter in opposition to California Assembly Member Ash Kalra’s bill to divest from Energy Transfer, the company building the Dakota Access Pipeline, a much-protested oil route stretching from North Dakota to Illinois, threatening ancestral lands of the Standing Rock Sioux Tribe.
Interestingly, over the last 10 years, Energy Transfer lost 5% of its stock value while the S & P went up, returning 13.6% annually. CalSTRS, according to its posted (6/30/20) financial reports, invested $42 million in Energy Transfer debt securities.
One does not need a crystal ball to predict waning returns for the fossil fuel industry; one does not need a doctoral degree in political science to know that alienating public education allies--youth, people of color, the indigenous--comes with political risks; one does not even need a degree in education to understand that teachers profiting from investments in global warming send a contemptuous message to their students facing the prospects of rising sea level, floods, drought, forest destruction—and human misery.
Anaya Sayal is part of the Youth Vs Apocalypse CalSTRS divestment team. The longer CalSTRS waits to divest, she says, “the worse the situation will get, so we need to act now, otherwise future generations will be drowning in climate issues that will be significantly more difficult to fix than for us right now.”
- Email Board@CalSTRS.com to urge the board to vote to divest.
- Join Fossil Free CA and sign their petition.
- Sign the Youth Vs Apocalypse & Earth Guardians Petition to CalSTRS.