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fossil fuel divestment
Why Are California’s Public Pension Funds Still Gambling Workers’ Savings on Fossil Fuels?
CalPERS and CalSTRS—collectively representing $780 billion and 2.5 million members—must act on their fiduciary duty and responsibly phase out fossil fuel holdings.
Oct 18, 2023
As world governments descended on New York City for Climate Week last month, California Attorney General Rob Bonta and Governor Gavin Newsom brought a momentous announcement: Following a year of record climate disasters, the state is suing the five biggest fossil fuel companies for climate damages and deception.
In this crucial move to hold the perpetrators of wildfires, floods, smoke, and deadly heat accountable for the destruction they are wreaking in our communities, the state of California joins dozens of municipalities with similar damages and deception lawsuits against major oil companies.
As far back as the 1970s, companies like Exxon, Chevron, and Shell knew all there was to know about the dangers of fossil fuel use causing global climate change—the very disasters we’re living through now. Instead of warning the rest of us, or pivoting their business models, the likes of Chevron doubled down on fossil fuels, all in the name of profit while the rest of us pay the cost.
There’s no room for coal, oil, and gas in any climate-safe investments.
So why are California’s public pension funds—CalPERS and CalSTRS, the two largest in the country—still gambling workers’ hard-earned savings on fossil fuels?
As revealed in a DeSmog exclusive, data pulled by Stand.earth and the Climate Safe Pensions Network from the Bloomberg Terminal reveals that CalPERS and CalSTRS collectively hold around $4.5 billion in Exxon Mobil, Shell, Chevron, ConocoPhillips, and BP, the five oil and gas corporations named as defendants in the lawsuit.
CalPERS and CalSTRS—collectively representing $780 billion and 2.5 million members—must act on their fiduciary duty and responsibly phase out fossil fuel holdings. There’s no room for coal, oil, and gas in any climate-safe investments.
That’s exactly what SB 252—California’s pension fossil fuel divestment bill—would achieve. The widely supported Fossil Fuel Divestment Bill, which passed the Senate in 2023, will head straight to the state Assembly in 2024.
To date, nearly 1,600 institutions representing over $40 trillion in assets have committed to fossil fuel divestment. In 2023 alone, new commitments came from the Church of England, New York University, and many more, after years of futile attempts to “engage with fossil fuel companies” and “help fossil fuel clients transition” failed.
Following the announcement of the lawsuit, Governor Newsom officially signed SB 253 and SB 261 into law—two of the three bills in California’s Climate Accountability Package (the third being SB 252). SB 253, the Climate Corporate Data Accountability Act, will require U.S.-based corporations doing business in California that make over $1 billion annually to publicly disclose their carbon footprint. SB 261, the Climate-Related Financial Risk Act, will require corporations, financial institutions, and insurers to report on climate-related financial risk.
As Governor Newsom said himself:
California taxpayers shouldn’t have to foot the bill for billions of dollars in damages—wildfires wiping out entire communities, toxic smoke clogging our air, deadly heat waves, record-breaking droughts parching our wells. With this lawsuit, California is taking action to hold big polluters accountable and deliver the justice our people deserve.
It’s time to bring the full Climate Accountability Package over the finish line, and pass SB 252 in 2024.
This is not only about divesting from fossil-fueled chaos, this is about correcting the course of California’s public pensions and aligning them with California’s climate-safe future: a future that includes renewable energy, Indigenous ecological leadership, affordable housing, and accessible healthcare and public transit for all. We have the opportunity to build a California where all of us can thrive.
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Why Fossil Fuel Divestment Works
Divestment is the start of a process of reducing the tremendous influence of the fossil fuel industry on our political system and thereby making it possible to win government action on climate change.
Jul 09, 2023
There is much debate about what fossil fuel divestment accomplishes. Some critics say it sounds good but accomplishes very little. They look at the economics and correctly conclude that divestment does not financially hurt fossil companies. However, these critics miss the political impact of divestment.
The goals of fossil fuel divestment are twofold. First, is to raise public awareness of climate change and the responsibility of fossil companies. Second, is to stigmatize or delegitimize the fossil fuel industry by calling them out as bad actors, weakening them politically, and thereby helping win government action on climate change. The University of Oxford Stranded Assets Program studied a number of divestment movements and concluded that almost all had been successful in ultimately winning restrictive legislation against their targeted industries.
Divestment is the start of a process of reducing the tremendous influence of the fossil fuel industry on our political system and thereby making it possible to win government action on climate change. Think about how the tobacco divestment movement made it unacceptable for politicians to take their campaign contributions and that in turn made it possible for the first time to pass public health legislation aimed at reducing smoking.
We are slowly starting to see delegitimization happen with fossil fuels.
Think about how the divestment movement from South African Apartheid in the 1980s made Apartheid unacceptable. And this in a country that has long turned a blind eye to racial oppression at home and oppression by U.S. supported regimes around the world. Twenty-six states, 22 counties, and over 90 cities took some form of divestment action against companies doing business in South Africa. As a result, the divestment movement had great power to shape public opinion and sway politicians. In 1986, Congress passed the Comprehensive Anti-Apartheid Act, which banned new U.S. investment in South Africa, and sales to the police and military. President Ronald Reagan vetoed the act, but the Republican-controlled Senate overrode the veto. That was the power of the divestment movement.
We are slowly starting to see delegitimization happen with fossil fuels. Nationwide over 3,700 politicians have signed a pledge not to take campaign contributions from the fossil fuel industry, including most notably President Joe Biden and Vice President Kamala Harris. The California Democratic Party recently voted not to accept fossil fuel money. In 2018, the Democratic National Committee did the same thing, but then quickly reversed course under pressure from some sectors of organized labor.
Economics versus Politics
Although divestment involves stocks and investments, the effects of divestment are political rather than directly financial. Research to date indicates that at best divestment announcements may have small, very short-term impacts on companies’ stock prices. There is no research showing that divestment directly financially harms fossil fuel companies or changes their behavior. Three economists won the Nobel Prize for their work showing that the massive anti-apartheid divestments had no effects on the share prices of targeted companies. Even the Oxford report on divestment movements, which finds strong political effects of divestment, recommends divestment campaigners “understand that the direct impacts are likely to be minimal.”
Of course, government action promoting clean energy and restricting fossil fuel projects, and possibly reduced bank financing will ultimately greatly harm fossil fuel companies, but this will come about due to the political effects of divestment, rather than direct financial impacts.
Even if divestment did financially harm companies that would be woefully inadequate to address climate change. We cannot wait for economic pressure to make new fossil fuel projects unprofitable—governments can stop permitting new projects now. We need government incentives and mandates for building electrification and electric vehicle use. To grow clean energy requires government tax credits, subsidies, and renewable portfolio standards. It will take government policies to ensure all this happens in a just and equitable way. We need government action on many fronts, and divestment can helps us win that action against fierce fossil fuel industry opposition.
Implications for the Divestment Movement
Whether the effects of divestment are political or financial affects the divestment movement in a number of ways.
Publicity and Messaging: For politics-focused divestment activists publicity and messaging are key. They want as many people as possible to know about a divestment demand or actual divestment action, and they want the message to be that divestment was done because of the immorality and responsibility of the fossil fuel industry with regard to climate change. If the message is instead that divestment is a smart financial move (which it is) that is not as powerful an outcome as it contributes less to delegitimizing the fossil fuel industry.
Politics-focused activists still need to use financial arguments to convince decision makers to divest and, in the case of pension funds, convince pensioners that they will not be hurt. But in a thoughtful paper, Daniel Apfel warns that too much focus on financial arguments distracts from moral arguments and may “...come into conflict with raising awareness of the destruction of frontline communities from fossil fuel extraction and effects of climate change.” It is also important that stigmatization be focused on fossil fuel companies not the institutions doing the investing, whether that be pension funds or universities.
For politics-focused divestment activists, divestment is a means to winning government action on climate change. Divestment in of itself is not the end.
What Gets Divested and Timeframe: Finance-focused activists often advocate for divestment not just from fossil fuel producers, but from a broad array of related industries such as equipment manufacturers, pipeline companies, and fossil fuel powered electric utilities. And they often want divestment to occur in as short a timeframe as possible and include not just fossil fuel stocks and bonds but also index funds that contain any fossil fuels and private equity. For politics-focused divestment activists a broad divestment demand is viewed as not as important as it does not affect the political impact of divestment. Strategically, a very broad divestment demand will be harder to win than a narrower demand, and it is the victory that most achieves the publicity and delegitimization goals of divestment.
Building a Movement: For politics-focused divestment activists, divestment is a means to winning government action on climate change. Divestment in of itself is not the end. Therefore, it is important to create a broad movement fighting on climate change issues that will build on divestment wins and push for government action on climate. For finance-focused divestment activists, divestment is seen as directly impacting fossil fuel companies, so there is less of a need to focus on winning government action or on building a broad movement.
Fortunately, despite differences in views about what divestment accomplishes, activists of different views are successfully collaborating in building a global fossil fuel divestment movement. To date almost 1,600 organizations have divested, with combined holdings of over $40 trillion.
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Database Shows US Cities, Colleges, and Even Green Groups Are Employing Fossil Fuel Lobbyists
"You shouldn't be funding the person who is poisoning you," said one former mayor.
Jul 05, 2023
More than 1,500 lobbyists in the United States who work on behalf of the fossil fuel industry have also been hired by local governments, universities, and environmental organizations that claim to be addressing the climate emergency, a database published Wednesday by F Minus reveals.
To take just three examples highlighted by The Guardian, which first reported on the searchable database of state-level lobbyists for upstream and midstream oil, gas, and coal interests: "Baltimore, which is suing Big Oil firms for their role in causing climate-related damages, has shared a lobbyist with ExxonMobil, one of the named defendants in the case. Syracuse University, a pioneer in the fossil fuel divestment movement, has a lobbyist with 14 separate oil and gas clients... The Environmental Defense Fund shares lobbyists with ExxonMobil, Calpine, and Duke Energy, all major gas producers."
F Minus, launched this month, says its goal is to demonstrate the extent to which fossil fuel lobbyists "are also representing people, schools, communities, and businesses being harmed by the climate crisis."
“It's incredible that this has gone under the radar for so long, as these lobbyists help the fossil fuel industry wield extraordinary power," James Browning, the group's executive director, told The Guardian. "Many of these cities and counties face severe costs from climate change and yet elected officials are selling their residents out. It's extraordinary."
"The worst thing about hiring these lobbyists is that it legitimizes the fossil fuel industry," Browning said. "They can cloak their radical agenda in respectability when their lobbyists also have clients in the arts, or city government, or with conservation groups. It normalizes something that is very dangerous."
"When you hire these insider lobbyists, you are basically working with double agents. They are guns for hire. The information you share with them is probably going to the opposition."
As the group notes: "The fossil fuel industry is rapidly losing the social license needed to build new projects as the severity of the climate crisis becomes increasingly clear and the public embraces the energy transition. Nevertheless, the fossil fuel industry remains firmly embedded in state capitols because of positive or merely neutral public opinion about its lobbyists."
"Multi-client lobbyists are often described as 'gatekeepers' to state officials because of their personal relationships and broad range of expertise," F Minus explains. "State lobbying laws prohibit these multi-client lobbyists from lobbying on both sides of a particular piece of legislation or other governmental action, but nothing prohibits a fossil fuel lobbyist from also working for a company or an organization that is being negatively impacted by the climate crisis."
"Victims of the crisis and advocates for net-zero and other climate goals routinely hire lobbyists who are promoting further dependence on fossil fuels on behalf of their other clients," the group's research shows. "F Minus is disrupting this dynamic and calling on people to fire their fossil fuel lobbyists."
F Minus found that more than 150 U.S. colleges and universities employed oil and gas industry lobbyists last year. Many of the institutions that have taken steps to divest from fossil fuels in recent years—including Dartmouth and California State—have Big Oil lobbyists on their payrolls.
Additionally, the group identified "several national and dozens of local organizations who work for wildlife conservation, emissions reductions, and other solutions to the climate crisis employ lobbyists who also work for the fossil fuel industry."
"The motives for these conservation groups employing coal, oil, and gas lobbyists may vary," the group observes, "but the impact of this strategy is to help these fossil fuel lobbyists present themselves as environmentalists."
Moreover, "some of the country's most climate-conscious local governments—and communities being hardest-hit by the climate crisis—employ lobbyists who also work for the fossil fuel industry," F Minus laments. California is home to many of the "thousands of towns, cities, and counties whose employment of fossil fuel lobbyists is radically at odds with their own plans to deal with the crisis."
As The Guardian reported:
Meghan Sahli-Wells saw the pressure exerted by fossil fuel lobbying first-hand while she was mayor of Culver City, California, where she spearheaded a move to ban oil drilling near homes and schools. Culver City, part of Los Angeles County, overlaps with the Inglewood oilfield, and the close proximity of oilwells to residences has been blamed for worsening health problems, such as asthma, as well as fueling the climate crisis.
"It takes so much community effort and political lift to pass policies and then these lobbying firms come in and try to undo them overnight," said Sahli-Wells, who ended her second mayoral term in 2020. Oil and gas interests, which spent $34 million across California lobbying lawmakers and state agencies last year, mobilized against the ban, arguing it would be economically harmful and cause gasoline prices to spike.
"There was just a huge push from the fossil fuel industry," Sahli-Wells said. "It's not a good look to be funding lobbyists for fossil fuels, especially with public money."
"I hope that many people just don't know they share lobbyists with fossil fuel companies and that this database will bring transparency and allow leaders to better vet these companies," she added. "You shouldn't be funding the person who is poisoning you."
A study published in May showed that the fossil fuel industry is more likely than other industries to lobby and its spending on "climate policy obstruction" has increased as opposition to its life-threatening business model grows.
Timmons Roberts, an environmental sociologist at Brown University, told The Guardian that "the fossil fuel industry is very good at getting what it wants because they get the lobbyists best at playing the game. They have the best staff, huge legal departments, and the ability to funnel dark money to lobbying and influence channels."
"This database really makes it apparent that when you hire these insider lobbyists, you are basically working with double agents," said Roberts. "They are guns for hire. The information you share with them is probably going to the opposition."
"It would make a big difference if all of these institutions cut all ties with fossil fuel lobbyists, even if they lose some access to insider decisions," he added. "It would be taking one more step to removing the social license from an industry that's making the planet uninhabitable."
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