CalPERS Urged to Press Carmakers on Emissions

The California Public Employees’ Retirement System should pressure automakers including General Motors Corp. to comply with state rules to cut carbon dioxide emissions, two directors of the pension fund said Monday.

California Controller Steve Westly and Sean Harrigan, president of CalPERS, sent a letter to other board members Monday saying that carmakers were wasting shareholder money by fighting rules that might be adopted by states that account for 25% of the U.S. car market.

This year, California approved regulations requiring makers of cars and trucks to cut emissions of the heat-trapping gas starting with 2009 models, making it the first state to regulate exhaust tied to global warming. Automakers have threatened to file lawsuits blocking the standards.

“I’m deeply concerned that the industry’s plans to fight new auto emission standards in our state could harm the long-term financial interests of share owners,” Harrigan said in a statement. “Auto companies and their share owners are better served if share owner dollars are used to comply with these standards rather than fight them.”

CalPERS, the largest U.S. pension fund, owns shares worth $838 million in GM, Ford Motor Co. and other car companies and frequently uses its investments to pressure businesses to oust managers or change policies.

CalPERS should join with other shareholders and pursue proxy campaigns if the automobile industry fights efforts to cut carbon dioxide emissions, Westly and Harrigan said in the letter. They asked CalPERS’ investment committee to discuss the issue at a Dec. 13 meeting.

“We hope that auto manufacturers are preparing for the future by investing in clean technologies, rather than fighting the inevitable,” the two officials said in the letter. “Worldwide efforts to address global warming are inevitable, and it is important that this board understand its effects on our investments.”

New York, Massachusetts and Canada have said they might adopt California’s rules, which require a 30% reduction in carbon dioxide emissions by 2016.

The Alliance of Automobile Manufacturers, representing GM, Toyota Motor Corp. and Ford, said the program would cost consumers $6 billion a year for modifications to vehicles while doing little to slow rising temperatures. Fred Webber, president of the group, said shortly before the rules were adopted that the group might sue the state.