California's two major public pension funds, the biggest in the nation, lost a total of more than $5 billion on energy-related investments for their fiscal years, ended June 30, according to a new report.
The California Public Employees' Retirement System posted losses on its oil and gas portfolio of about $3 billion, a 28% decline, and similar set of investments at the California State Teachers' Retirement System was down 27%, or about $2.2 billion, the report said.
Both systems, though, posted overall annual gains for the year. CalPERS, with $300 billion in assets under management, reported an overall gain of 2.4%. CalSTRS, with about $190 billion in assets, had a total return of 4.8%.
The report covering the funds’ largest oil and gas investments was prepared by Trillium Asset Management, a Boston investment firm specializing in what it calls “socially responsible” investments.
Trillium produced the report on behalf of 350.org, an environmental group backing a pending state Assembly bill that calls for California's big pension funds to divest from coal-related holdings.
“This is a material loss of money, which directly impacts the strength of the pension fund,” said Matthew Patsky, Trillium's chief executive. “Fossil fuel stocks are volatile investments. Investors and fiduciaries should take this moment to reassess their financial involvement in carbon pollution, climate disruption and the financial risk fossil fuels plays in their portfolio.”
Responding to the report's data, Joe Deanda, a CalPERS spokesman, said: "We're a long-term investor and don't focus too much on any single year's performance. It won't change our long-term investment strategy."
CalSTRS spokesman Roberto Duran said the fund is “researching” its thermal coal holdings in light of a state Senate bill that would require it to divest such holdings.
The funds' energy losses came during a year in which energy holdings generally fell amid plunging oil prices.
A key crude oil benchmark, West Texas intermediate, fell 43% during the fiscal year ended June 30. An index of publicly traded energy stocks in the Standard & Poor's 500 fell by 24.3% during the period, according to Factset Research Systems Inc. The index is down an additional 6.7% from July 1 through Wednesday.
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