Lawmakers in the Assembly gave final approval Wednesday to a measure that would require the state’s public pension funds to divest from their holdings in thermal coal.
The measure by Senate leader Kevin de León (D-Los Angeles) would prohibit the state’s public employees’ pension fund, CalPERS, and the teacher’s retirement fund, CalSTRS, from making new investments in coal companies. It also would require the funds to liquidate their existing investments in coal by July 1, 2017.
“California is a world leader in the fight against climate change. Certainly we can find more sustainable and profitable investments for our public pension funds that better suit our values,” said Assemblyman Rob Bonta (D-Alameda), who presented the bill on the Assembly floor.
Assemblyman James Gallagher (R-Yuba City) opposed the bill, arguing that limiting investment options could harm the funds’ fiscal health.
“We need to make sure we’re making the best decisions that would provide for the overall sustainability of these pension funds,” Gallagher said. “Let’s not attempt to micromanage and stop the state public pension boards from making new investments or renewing existing investments ... in the most financially prudent way.”
Bonta countered that the bill would not require divestment should it conflict with the pension boards’ fiduciary responsibility to pursue the best investments.
“But since coal is, in fact, a bad investment, that conflict will not arise, best as we can tell,” Bonta said.
The measure, SB 185, passed the Assembly on a 43-27 vote and now heads to Gov. Jerry Brown’s desk.
De León, in a statement, cheered the bill’s passage.
“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,” he said. “California’s utilities are phasing out coal, and it’s time our pension funds did the same.”
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