CalPERS considers – then rejects – efforts to end tobacco divestment
As the nation’s largest state-based pension fund, the California Public Employees’ Retirement System is known for using its massive investment muscle to promote various social-investment causes. So-called ESGs – Environmental, Social and Governance issues – are a major theme for CalPERS, as it promotes broader board diversity, moves away from global-warming-creating carbon-intensive industries, and invests more in women-owned and minority-owned businesses, among many other values-oriented priorities.
Advocates for these types of investments often argue that it’s good business to focus more on “socially responsible” companies or to divest from others, but an ongoing debate at CalPERS suggests that isn’t always necessarily true. For months, CalPERS’ top investment officials have been setting the stage for a vote in the investment committee on Monday. They proposed ending CalPERS’ 16-year policy of divesting from tobacco stocks – a decision that analysts say has cost the underfunded system as much as $3 billion over the years as tobacco stocks have soared.
But in a 9-3 vote, the investment committee decided not only to maintain its current ban on tobacco investments, but to expand it further. As the Sacramento Bee reported, the committee’s vote is final because it includes all members of the governing board.