Tens of thousands of teachers and public servants in California were shocked recently to learn that not only their CalPERS and CalSTRS pension managers had been dishonest with politicians in Sacramento about investments in fossil fuel companies, but also that these dirty investments lost them $17.4 billion.
Public servants want to know that their pension funds make profit to ensure a healthy retirement, without endangering the health—or lives—of their members. California has a long record of satisfying both needs. The divestment from dishonest and risk-laden tobacco companies was a very wise and popular move in the 1990’s, and in recent years California has divested from the risk-laden declining coal industry, and volatile nations like Iran and Sudan.
Such divestments are in line with the fiduciary requirements of investment advisors, who must take into consideration issues of ethics, governance, risk, and long-term viability of investments they choose for the teachers, firefighters, and other public workers they serve.
Economic benefits galore by solving the climate problem
In addition to the extra $17.4 billion public workers would have had to retire on, Californians would be paying considerably less taxes if the state wasn’t wasting billions in payouts due to extreme weather. In the last five years, extreme weather damage in the US cost $765B, average annual losses in California are $14B, and these figures are rising.
Because of these rising climate-related financial losses, California is spending $37 billion of taxpayer money fighting climate change in 2022. Almost all of these costs are due to emissions from fossil fuels, which have been documented by Big Oil scientists for well over 45 years, and have been a settled issue amongst the scientific community for over 30 years, despite active disinformation campaigns by ExxonMobil and their Big Oil allies.
Taxpayer monies have been spent for over 100 years to subsidize private energy company profits while wrecking the environment, and using public pension funds to prop up fossil fuel companies is just the tip of the iceberg. Public subsidies in 2020 to the fossil fuel industry were $5.9 trillion in 2020, or $11m every minute, according to the International Monetary Fund. Business is slowly realizing the massive negative impacts on the global economy because of fossil fuels, with the Wall Street Journal recently issuing a major report stating, “Climate Inaction Could Cost $178 Trillion By 2070“.
Furthermore, life- and health-threatening air pollution from fossil fuel extraction costs the California economy more than $28 billion annually. These costs disproportionately fall upon Black, Latine and low-income California residents, who are more likely to live near hazardous waste sites, unplugged oil and gas wells, power plants, oil refineries, and landfills.
The human costs are real for those on the front-lines of extreme weather
The damage to economies and people’s retirement funds is not the only negative impact of climate disruption. Real people are suffering right now on the front-lines of climate impacts, whether from hurricanes, typhoons, fires, floods, pollution or heat waves. Hamira Kobusingye, a young climate activist from Uganda, says, “Africa is only responsible for less than 4% of global emissions. It’s unfair that we suffer the most impacts of climate change. I urge you to think about the people at the front line losing their livelihoods, homes, cultures and children, who are being starved and malnourished, futures that are being destroyed by the climate crisis and continued fossil fuel exploitation. So I urge you in California to divest from Fossil Fuels and save lives and families in Africa.”
Together, CalPERS and CalSTRS have invested over $593 million in TotalEnergies and CNOOC, the oil giants behind the East African Crude Oil Pipeline. If constructed, the pipeline would displace 100,000 people across Uganda and Tanzania, as well as threaten irreplaceable ecosystems and numerous endangered species. Inevitable oil spills would harm 40 million people who depend on the land for clean water, food access, and their livelihoods.
The path we are on can be turned around if we only have the political will to do so. California has the world’s fifth largest economy and is known for being innovative and dynamic. California can lead the world in looking to the future of energy needs and not the past. Long-term trends prove the fact that old energy sources like non-competitive coal or fossil fuels will be replaced by clean energy. An obvious advantage to wind and solar energy is that while oil, gas and coal have very high extraction costs, wind and solar have no extraction costs, they arrive to us for free. If we invest in these future energy technologies, employment in California’s decarbonizing economy will result in large job gains, and decades of economic growth as cutting edge technologies are exported by California businesses.
To date, CalPERS and CalSTRS have made repeated empty promises that by engaging with fossil fuel companies, they would bring positive change for the climate. A new study proves the opposite, that fund managers actually voted against climate resolutions, and failed to get fossil fuel companies to reduce greenhouse gas emissions, increase their renewable energy production, or reduce fossil fuel financing.
Time for our representatives to get the job done; pass SB 1173
CalPERS’ and CalSTRS’ fossil fuel investments have devastating real-world impacts, not only for the state workers they serve but for frontline communities in California and around the world who bear the brunt of fossil fuel pollution and climate catastrophe.
Now is the time for State leaders to do the right thing and pass bill SB 1173 to divest CalPERS and CalSTRS from fossil fuels. If they weren’t aware of all that is at stake, they should be by now. If your State Assembly member is not already backing this bill, now is the best time to write or phone them, to urge them to do so. For the benefit of our public workers, the climate, and the most marginalized from across the planet, let’s get this job done.
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by Jason Kirkpatrick and Miriam Eide
Jason Kirkpatrick is the Communications Specialist for climate non-profit 350.org. He is also a former Vice-Mayor of Arcata, California, and spent four years successfully working to divest CalPERS from tobacco investments in the 1990s.
Miriam Eide is the Coordinating Director at Fossil Free California, and has been a core organizer on the Fossil Fuel Pension Divestment Bill (#SB1173) from its inception. She is a member of the Climate Safe Pension Funds and Stop the Money Pipeline coalitions.