Teachers’ Pension Fund Studies Divestment of Tobacco Holdings

In preparation for possible unloading of its tobacco holdings, the investment committee of the $110-billion state teachers’ pension fund directed its chief investment officer Wednesday to draft a divestment policy.

The move comes amid growing pressure by teachers’ groups and state Treasurer Phil Angelides on the California State Teachers Retirement System to divest $319 million in tobacco stocks. More than a half a dozen speakers testified in support of the effort during a committee meeting Wednesday at CalSTRS headquarters in Sacramento.

“We urge the board to develop a policy to divest,” said John Perez of United Teachers-Los Angeles. “Your members are harmed by this product. . . . Your students are harmed by this product.”

Added Peter Camejo, a trustee for Contra Costa County Employees Retirement Assn., “Tobacco is no longer a normal investment. It’s now seen as a product that needs to be ended.”

The CalSTRS investment committee is expected to vote in May on the draft policy, which would set parameters for when the board considers divesting itself of stocks in a particular industry. A discussion on whether to use the policy to remove tobacco stocks from the fund’s portfolio is scheduled for June.

A series of studies commissioned by CalSTRS were presented during Wednesday’s meeting. Divesting tobacco stocks would not have a significant impact in terms of risk and returns on CalSTRS overall portfolio, according to Allan Emkin of Pension Consulting Alliance Inc.