July 21, 2017

What They’re Saying: West Coast Voices Say No to Divestment

Stakeholders from all over the west coast are increasingly outspoken against calls to divest state and city pension funds from fossil fuels.  Their primary concern is that a divestment policy will inevitably decrease the fund’s returns, which could impact payouts.  Many have also taken issue with the fact that a divestment policy would take away any influence they may have as a shareholder. Learn more about what pensioners – the people impacted by divestment – are saying:

• Corona Police Officers Association Treasurer, Jim Auck: “We cannot afford to lose funding for law enforcement officers in exchange for a socially responsible investment policy” (LINK)
• CalSTRS Chief Investment Officer Chris Ailman: “I’ve been involved in five divestments for our fund. All five of them we’ve lost money, and all five of them have not brought about social change.” (LINK)
• International Union of Operating Engineers Director of Public Employees, Steve Crouch: “It’s time for CalPERS to re-evaluate their investment strategies and focus more on improving their investment returns and less on ‘socially responsible’ investments” (LINK)
• CalSTRS Chief Executive Officer Jack Ehnes: “Divestment bears the risk of adversely affecting an investment portfolio and severs any chance to advance positive change through shareholder advocacy.” (LINK)
• CalPERS Fund: “Divesting appears to almost invariably harm investment performance, such as by causing transaction costs (e.g., the cost of selling assets and reinvesting the proceeds) and compromising investment strategies. In addition, there appears to be considerable evidence that Divesting is an ineffective strategy for achieving social or political goals, since the usual consequence is often a mere transfer of ownership of divested assets from one investor to another. Investors that divest lose their ability as shareowners to influence the company to act responsibly.” (LINK)
• SCERS Chief Investment Officer, Jason Malinowski: “We do not see the economic justification. To our knowledge, there are no investment consultants to U.S. public pensions that have recommended that those public pensions divest from fossil fuel companies.” (LINK)
• Hispanic Chambers of Commerce of San Francisco CEO Carlos Solorzano: “Divesting from fossil fuels to show that you care about the environment is certainly a great way to make some noise and create the illusion that you did something good for the planet. The simple truth is, not only does divestment not work effectively, but it also hurts the beneficiaries of those funds.”  (LINK)

These groups are right to push back on divestment. Divesting not only harms the funds themselves, but also the individuals who rely on the funds. While the benefit of divesting is purely symbolic, the impacts of divestment are concrete and damaging.