DIVESTMENT DEBATE — Fossil fuel divestment advocates have been trying to make the case that ending public investments in fossil fuels is the morally and financially right thing to do. It’s an attempt to translate the movement’s moderate success in the private sector — $40 trillion worldwide has been at least partially divested — to the public sphere. Pension funds hear them loud and clear. They’re just not buying what divestment advocates are selling. While Maine last year became the first state to force its pension funds to divest from fossil fuels via legislation, red states like Texas, Kentucky and West Virginia are divesting from companies and banks accused of refusing to do business with fossil fuels. Even in deep-blue California, advocates aren't getting anywhere. A bill that would have forced the California State Teachers' Retirement System and the California Public Employees' Retirement System to divest from fossil fuels stalled in the state Legislature after the nation’s two largest public pension funds opposed it. “CalSTRS’ mission is to ensure a secure retirement for California’s nearly 1 million working and retired public school educators,” said CalSTRS spokesperson Rebecca Forée . “Divesting from fossil fuels ignores the larger climate change risks to the portfolio. CalSTRS’ approach is more holistic and includes measuring emissions, engaging directly with companies, working to expand government policies and investing in solutions.” There’s nuance here. While both funds generally oppose divestment and especially oppose legislative mandates to divest — including a bill this session that would have them divest from Russia — they took no position on a 2015 bill to divest from coal used to generate electricity. What's the difference? CalSTRS said it was already divesting from thermal coal, citing the financial state of the industry. In other words, it’s about money (most of the time, anyway). And if you’re managing a huge fund for millions of retirees, it’s a pretty awkward time to make the case for pulling out of fossil fuels. “Many pension funds and other institutional investors that own fossil fuel stocks believe it is better to hold them and engage to encourage boards to manage climate risks through the transition to a low-carbon economy,” said Amy Borrus, the executive director of the Council of Institutional Investors. “For every seller, there is a buyer who may not be willing to press the board for change. That’s why many pension funds believe it is not possible to divest away the risks associated with climate change. When it comes to tangible impacts of divestment, CalPERS’ past divestments from thermal coal, firearms, Sudan and Iran have generated gains, while divestment from tobacco has resulted in losses, according to a 2020 report from the fund. Overall, divestment cost the fund $2.18 billion. Advocates claim, however, that there’s also a symbolic point of divestment. “I think divestment can (deliver financial gains) and be symbolic, and they’re not necessarily contradictory. Symbolic impacts are undervalued,” said Ted Hamilton , co-founder of the Climate Defense Project. “If we only narrowly focus on discrete dollar figures, we do miss the bigger picture of how these things could develop over time. Stigmatizing certain investments can hurt domestically the business prospects of these institutions. They don’t want to be pariah businesses. Things are going to get so bad that engendering a crisis in fossil fuel stocks today is certainly worth it.” And as the effects of climate change become more apparent, and the policy tools to address it dwindle or remain unused , the symbolic part of the campaign is taking on more importance with activists — whether or not it moves the needle financially.
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