This post was originally written by Brett Fleishman, Senior Analyst at 350.org, with later edits by Jay Carmona, Community Divestment Campaign Manager.
California is the 8th Largest Economy in the World, And California’s pension fund is the 55th Largest Fossil Fuel Company in the World.
Today, Fossil Free Indexes’ research team published a deep dive analysis on CalPERS’ holdings of the Top 200 coal, oil and gas companies by CO2 emissions potential.
California’s pension fund isn’t really a fossil fuel company, or a company at all; but they currently finance enough coal, oil, and gas reserves to put them well within the top 100 oil and gas reserve holders and also the top 100 coal reserve holders.
The California Public Employees’ Retirement System (CalPERS) is the nation’s largest pension fund, with a $300 billion portfolio. CalPERS is a leader in the investment world and has a huge impact on the global economy. When it comes to framing the climate crisis and finding solutions through an investment perspective, everyone, including the United Nations, looks to CalPERS for leadership.
On August 16th, Anne Stausboll, CalPERS CEO, published this article describing CalPERS response to climate and carbon risk within their portfolio. Essentially, the CalPERS team is focused on requesting transparency with companies on carbon risk issues (e.g. emissions and stranded assets), it’s called “disclosure.” They have done some fairly significant and progressive work changing the rules so that companies will have to disclose climate risk or carbon output with the Security and Exchange Commission (SEC) – which is a good thing. With that being said, Ms. Stausboll noted in her article that their efforts have fallen short of the issues, “…the breadth and quality of the disclosures with the SEC are still lacking.”
While CalPERS claims that “Climate change is an important issue for [the pension] System,” it’s useful to ask: what statements are they making with their money?
Fossil Free Indexes found, shockingly, that over the last 10 years, CalPERS has roughly doubled the potential emissions it finances. In 2004, CalPERS held 90 coal, oil, and gas companies on the Top 200 list; today they hold 149. If CalPERS directly held the fossil fuel reserves allocated to its 2013 portfolio it would rank #55 on the top oil and gas reserve holders list and #88 on the top coal reserve holders list.
Not only is CalPERS invested in massive amounts of carbon that we simply cannot burn, they are losing money. CalPERS is invested in plummeting coal stocks like Peabody Energy, the world’s largest pure-play private sector coal company, which has lost 74 percent of its value over the last three years. And China Shenhua Energy Co., the nation’s biggest producer, who is down 27 percent over the past two years. And Indonesia’s biggest coal exporter, PT Bumi Resources, down more than 80 percent over the past two years. In fact, the five companies that make up 80 percent of CalPERS coal debt holdings have accounted for a loss of $315 million in 2013.
CalPERS is also entrusting Californians’ pension dollars to Vladimir Putin by moving much of its fossil fuel investments overseas. It is invested in both Gazprom and Rosneft, the Russian state owned oil and gas companies that reign supreme at the top of the 200 list, holding massive amounts of potential carbon; and who are listed on the US sanctions list for Russia’s geopolitical boondoggle in the Ukraine.
At the moment, CalPERS is expecting that disclosure will provide “solutions.” However, Anne Stausboll has suggested that, although Exxon and Shell will not take climate change seriously, their unseriousness may be a topic of conversation at the investment regulatory body (the SEC), who could potentially provide this information to other investors.
“[Asking companies to stress-test climate risk] resulted in new detailed responses from companies like Exxon Mobil Corp. and Royal Dutch Shell, which illustrate, unfortunately, their unwillingness to seriously wrestle with these issues. An expectation that this risk will be discussed in more detail in SEC filings is part of the solution.”
CalPERS continues to invest (and increase investments) in Exxon, Shell and even poor-performing coal companies. Given these investments, what real motivation do these companies have to disclose anything? Talk is cheap, and we need action. If CalPERS is going to be a leader on climate issues, they need to move their money out of old energy, out of sanctioned companies, and toward our future needs. Otherwise they are just another fossil fuel company – number 55 in fact.
The report can be accessed on FFI’s site here.