The California State Teachers’ Retirement System, one of the largest pension funds worldwide and the second-largest in the United States, will sell all its investments in U.S. thermal coal companies, the board announced last night.
The fund’s investment committee chairwoman, Sharon Hendricks, said the decision was made for financial reasons and pledged to "initiate engagement" with foreign coal miners.
"We determined that given the financial state of the industry, the movement of the regulatory landscape and coal’s impact on the environment, its presence reflects a loss of value," Hendricks said in a statement. "We will now move ahead to determine the fiduciary appropriateness of non-U.S. thermal coal companies in the CalSTRS portfolio and make an additional decision based on those findings."
CalSTRS’s decision will affect $1.5 million worth of holdings out of the fund’s $186 billion portfolio.
Shares of Cloud Peak Energy Inc., Hallador Energy Co., Peabody Energy Corp. and Westmoreland Coal Co. will be sold, though it wasn’t immediately clear if those positions have been or soon will be zeroed out.
CalSTRS said the decision fits the fund’s fiduciary duties. The fund started analyzing fossil fuel divestment last April — well before Gov. Jerry Brown (D) signed a law in October that would require CalSTRS and the California Public Employees’ Retirement System, a $297 billion fund, to sell their thermal coal positions.
State Sen. Kevin de León (D), who shepherded that legislation through passage, cheered the fund’s choice.
"This decision recognizes the fact that coal is a financially and environmentally toxic investment," he said in a statement.
The Rockefeller Brothers Fund, the University of Glasgow, the World Council of Churches and French insurer AXA SA — some of the most influential organizations to divest — have each committed, in varying degrees, to sell their oil, gas and coal shares.
But yesterday’s move from CalSTRS — which manages retirement savings for about 900,000 people and is widely viewed as a bellwether for long-term investment strategies — marks the most salient victory in the United States for environmental advocates who have called for colleges, cities, religious institutions and other organizations to sell their fossil fuel stocks.
"CalSTRS’s priority is, and always has been, safeguarding the financial futures of our members," Hendricks said.
More than 400 institutions and roughly 200 individual investors have pledged to sell their fossil fuel holdings, based on data from Arabella Advisors. Advocacy group Fossil Free places that tally at 503 institutions collectively worth $3.4 trillion.
Directors of the Norwegian sovereign wealth fund, worth approximately $900 billion, sold coal industry investments last year and said it will screen out companies from its portfolio that generate 30 percent or more of their revenue on coal.
The divestment campaign has drawn comparisons to the financial boycotts of companies that operated with the South African government during apartheid rule and the Sudanese during the Darfur genocide.
"In 2007, #VT divested from Sudan," Vermont Gov. Peter Shumlin (D) said yesterday on Twitter. "Big Tobacco lied about danger of cigarettes so #VT divested in 1997. Time to do the same w/ coal & ExxonMobil."
In his State of the State speech in January, Shumlin requested that Vermont’s pension funds divest coal and Exxon Mobil Corp. assets.