Divestment from Fossil Fuels Is Not the Solution
July 11, 2014
The authors of the July 10 Sacramento Viewpoints piece, "CalPERS should pull money from fossil fuels industry,” call for CalPERS to divest from fossil fuels.
We all have a shared concern with climate risk, but our view is that the solution lies in tackling energy companies through an engagement process focused on finding solutions, rather than walking away.
We engage with more than 100 companies, on an annual basis to ensure the high standards of corporate governance that underpin effective climate change risk management, and we invest in climate change solutions across our Global Equity, Private Equity, and Real Estate portfolios.
The issues raised by climate change are complex and challenging. Over the last two decades, we have been at the forefront of tackling climate change issues through policy advocacy, engagement with portfolio companies, and investing in climate change solutions, something we would not be able to do if we did not have a seat at the table. We have also reduced the carbon footprint of our own operations - since 2006 we have reduced greenhouse gas emissions by 30%.
CalPERS was a founding member of the Investor Network on Climate Risk - a leading network of 100 institutional investors representing more than $10 trillion, addressing a policy agenda that calls on governments and regulators to introduce carbon pricing and disclosure, so that risks can be tackled effectively.
CalPERS is also actively collaborating in the Ceres led Carbon Asset Risk Initiative - that draws together 70 global investors managing more than $3 trillion of collective assets. The initiative asks 45 large oil and gas, coal, and electric power companies to assess the financial risks that climate change poses to corporate business plans - companies include ExxonMobil, Royal Dutch Shell, BHP Billiton, Rio Tinto, and Vale.
CalPERS has a fiduciary duty to be a principled and effective investor to meet our financial commitments to our members and future members.
Addressing climate change is paramount to this commitment, and we will continue to partner with other like-minded investors to advocate for change on this important issue.