Jane is a retired English and Spanish middle school teacher who receives a pension from the world’s largest educator-only pension fund (and the second largest US pension system), California State Teachers Retirement System (“CalSTRS”).

A few weeks ago, Jane wrote a letter to the CEO of CalSTRS, Jack Ehnes. The letter started like this, “I am very concerned that my CalSTRS pension has holdings in the fossil fuel industry for two reasons–moral and financial.”

Jack Ehnes replied to Jane with a well-crafted response that covered CalSTRS environmental, social and geopolitical investment policies and general beliefs in investment climate risk. He went on to describe CalSTRS proclivity to engagement as opposed to divestment, and even mentioned the role CalSTRS played in soliciting a response from Exxon about stranded assets.

Jane’s second email to Jack Ehnes is worth a read. This movement is well framed in a debate between a retired English teacher and the CEO of a $200 Billion pension fund. A small group of teachers and retired teachers have leaned in to join the conversation (seen as the undersigned). In short, people are ready for more bold action. Enjoy:

Mr. Ehnes, thank you for your response that addresses CalSTRS’ continued investment in the fossil fuel industry. We appreciate the effort CalSTRS has made in addressing climate change, especially the work of the Green Initiative Task Force. However, we believe engagement is inadequate to alter the course of an industry that has no intention of leaving its carbon reserves in the ground and spends hundreds of millions daily in search of new carbon to burn.

Climate change has already happened and many people are suffering. Extreme droughts have caused human displacement and wrought instability to many regions worldwide. And let us not forget the emotional plea of Philippines lead negotiator Yeb Sano at the opening session of the UN climate summit in Warsaw—calling for “an end to this madness” as his country suffered the strongest typhoon that ever made landfall in the course of human history. Closer to home, California is witnessing a record drought. “Right now, we have communities whose wells have gone dry, completely. They are literally living out of water in buckets for their basic bathing needs,” said Firestone, co-director of the Community Water Center, which works in the southern San Joaquin Valley. Unlike other worthy divestment causes, CalSTRS’ divestment from fossil fuel has an unprecedented ethical obligation that is nothing short of helping to maintain a climate conducive to human life.

CalSTRS’ fiduciary duty to protect the pension fund from an impending carbon bubble may outweigh its ethical responsibility. Who better to understand this risk than Republican Henry Paulson, who was secretary of the Treasury when the credit bubble burst? He warns, “We’re making the same mistake today with climate change. We’re staring down a climate bubble that poses enormous risks to both our environment and economy. The warning signs are clear and growing as the risks go unchecked….This is a crisis we can’t afford to ignore…. We can see the crash coming, and yet we’re sitting on our hands rather than altering course. We need to act now….”

Acting by merely engaging fossil fuel companies is inadequate. The situation is too urgent. It is unrealistic to wait for a third of the companies that CalSTRS targeted and who showed “evidence of their desire to either disclose efficiency efforts or consider alternative approaches” to take sufficient action. We are on a tight time-line that doesn’t lend itself to time-consuming negotiations which will likely produce unacceptable results. Even though some fossil fuel companies acknowledge climate change, they seem to be oblivious of the urgency to act. From their point of view, to acknowledge the looming carbon bubble would be bad for business. Their actions are similar to those of the banking industry at the brink of the housing crash.

Exxon’s reluctant decision to report how it will assess the risk of stranded assets from climate change probably was influenced by shareholder engagement, but once Exxon acknowledged the risk, Rex Tillerson, CEO continued to reassure investors that none of ExxonMobil’s assets will become stranded. Engaging with such companies to keep 80% of their reserves underground seems futile. New York State Comptroller Thomas P. DiNapoli, trustee of one of the largest pension funds in the country concludes, “Investors have repeatedly engaged fossil fuel companies, but the results have fallen short given the threat it poses to the entire global economy.” Enough of engagement.

CalSTRS Divestment Policy clearly states that it will not divest unless “one of the 21 Risk Factors is violated over a sustained time frame to the extent that it becomes an economic risk to the Fund, a potential loss of revenue exists, and where it weakens the trust of a significant portion of members to the System.” With financial entities such as HSBC and World Bank; the likes of Bevis Longstreth, former Commissioner of SEC who makes a strong financial case for divesting from fossil fuel; Henry Paulson, former US Secretary of Treasury; and Comptroller DiNapoli sounding an increasingly urgent alarm to the investment community about the financial and environmental risks of climate change, the Environmental Risk Factor has indeed been violated. It is time for CalSTRS to proceed to step two of its Divestment Policy—evaluation.

We ask that Christopher Ailman, CIO, bring the issue before the Investment Committee for consideration of divestment from fossil fuel companies with input from financial experts including those who would present the financial arguments for divesting from the CTI’s top 200 fossil fuel companies. Please direct your response to Jane Vosburg who will communicate your response to the undersigned.


CalSTRS Network of Educators for Fossil Fuel Divestment

Jane Vosburg, Melissa Matson, Deborah Silvey
Scott Johnson, Kent Minault, Jim Waterhouse
Jess Kochick, Bill Balderson, Danitsa Finch
Ed Navarro, Jocelyn Coltrin, Carmen Osoro
Sandi Martin, Mark Wardlaw, Seth Geffner
Will Dunn, Rachel Carusone, Ron Kristof
Carolyn Kristof, Bill Vosburg, Dave Franzman,
Julie Seorle, Jean Costa Becky Hiss,
Gary Waayers, Bob Duxbury, Art Horner