We're disappointed by CalPERS "no divestment, ever" policy aimed at fossil fuel activism

RL Miller, cofounder of Climate Hawks Vote, states in response to the decision by CalPERS, California’s giant public pension fund, to adopt a “no divestment, ever” policy: “We’re deeply disappointed by CalPERS’ decision to significantly weaken its tradition of shareholder activism, and instead engage with fossil fuel companies whose business plan is destabilization of the earth’s climate. While we appreciate the minor gains garnered by CalPERS’ shareholder engagement, e.g., disclosure of climate risks at an international mining business, that incrementalism pales compared to the challenge presented by climate change, and activists’ demands to divest. In particular, CalPERS refuses to divest from the Dakota Access Pipeline owners, and its shareholder engagement – consisting of one letter a few weeks before oil began flowing under sacred Indigenous lands – is nothing but a figleaf.”

In February 2017, Climate Hawks Vote presented CalPERS with 32,000 signatures on a petition requesting CalPERS to divest from the Dakota Access Pipeline, brought dozens of activists to testify to the CalPERS board regarding the pipeline, and generated hundreds if not thousands of calls.  However, in response the board only wrote one letter requesting that the pipeline be rerouted, after the pipeline was 90 percent finished, and the letter had no impact. CalPERS has $355 million of California retirees’ funds invested in the pipeline, and an additional $1 billion in Exxon. “CalPERS needs to divest its interests in Energy Transfer Partners immediately, and the rest of the fossil fuel industry in an orderly fashion, to reflect California retirees’ values,” says Miller.

In addition to founding Climate Hawks Vote, Miller is also the chair of the California Democratic Party’s environmental caucus, and authored the 2015 resolution requiring CalPERS and CalSTRS to divest from fossil fuels; that resolution became SB 185 requiring the funds to divest from coal, signed by Gov. Brown in 2015.

Miller’s remarks as prepared for delivery to the CalPERS board on April 17, 2017:

“Jesse Unruh, who pioneered CalPERS’ activist shareholder strategy, would be horrified.

“You are deliberately choosing to shun the single most effective tool in an engaged shareholder’s toolbox: divestment.

“Your item 5a, which can be summed up as “no divestment, ever,” follows testimony of more than four dozen engaged and angry Californians at your February meeting—all of them passionately critical of your investment in Energy Transfer Partners, owner of the Dakota Access Pipeline. In a broader context, this attempt at policy that essentially bans divestment from any actor, no matter how nefarious, arises during an ongoing national struggle in which pension funds, universities, and other fiduciaries are asked by their stakeholders to divest their holdings in fossil fuels. In 2015 the California Democratic Party passed a resolution, which I wrote, calling on CalPERS and CalSTRS to divest from fossil fuels. Yet two of your largest individual stock holdings remain Exxon and Chevron.

“You’ve proposed your “no divestment, ever” strategy as a reaction to demands for divestment on a broad range of topics, but most significantly fossil fuels and the Dakota Access Pipeline. I speak on behalf of California public employees, teachers, retirees, and indeed all Californians when I say: the extraordinary challenge of climate change to our planet and our species requires an extraordinary response. And occasional voluntary climate risk reporting falls far short of that extraordinary response. By refusing engagement strengthened by the threat of divestment, and by refusing to even consider divestment on its face, the two largest and most influential pension funds in the nation are engaging in a form of climate denial.

“The figleaf of shareholder engagement is demonstrated by your actions following the February meeting. After Indigenous people, climate activists, and ordinary CalPERS retirees rallied in front of your office and spoke at the meeting demanding divestment, you wrote one letter asking that the Dakota Access pipeline be rerouted. That letter was written after the pipeline was 90 percent built, and just a few short weeks before oil began flowing through sacred lands. In other words, your letter had no effect whatsoever, except insofar as it may have enabled you to tell riled-up Californians that you “engaged.” This was a meaningless gesture, and you know it and we know it. By requesting indirect action (asking banks to lean on Energy Transfer Partners to reroute the pipeline) after the issue was essentially moot CalPERS showed the board to be complicit in the dishonoring of the treaties as well as in fossil fueled climate destabilization.

“In the meantime, you “negotiated amendments” with Assembly member Ash Kalra, the author of AB20, a bill written to call upon CalPERS and CalSTRS to divest from the Dakota Access Pipeline. Your amendments gutted the bill. Instead of divestment, the bill now calls upon CalPERS to monitor its investments (which, as you state repeatedly, you already do). Meanwhile, the oil flows through the Dakotas. Energy Transfer Partners is now building another pipeline, this one in West Texas to send fracked natural gas to Mexico. And you’re still invested in Energy Transfer Partners.

“I’m here to ask you to divest from each of the investors in Energy Transfer Partners; to significantly increase your engagement as asset owners committed to working on behalf of all Californians to combat the threat of climate change; to retain the ability to divest when the great moral challenges of our time demand it; and to tell you that the world is watching what you do.”