For the First Time, Union representing CalPERS Beneficiaries Calls for an End to Exxon Bonds
With Trump Vowing to Reverse Key Climate Protections, Community, Labor Strengthen Call on CalPERS to Protect Retirement Security
SACRAMENTO – CalPERS beneficiaries testified November 18 calling on the CalPERS Board of Directors to commit to no new Exxon bond purchases to protect against financial risk due to climate change.
The November Board meeting marks one year since CalPERS announced a sustainable investment strategy with a focus on reaching net zero by 2050. In testimony, union leaders and beneficiaries called for more transparency around core investments that comprise CalPERS’ $100 million sustainability fund.
“SEIU Local 1000 respectfully calls on the Board to place a moratorium on new Exxon bond investments,” said Daniel Schoorl, legislative advocate for SEIU Local 1000, the union with the largest concentration of CalPERS beneficiaries including current workers and retirees.
Bobby Roy of SEIU Local 1000 testified at the Board meeting Monday that “Despite CalPERS and other investors' efforts to engage with Exxon, the corporation remains committed to a business model that is fueling the climate crisis and rebuffing engagement efforts by [CalPERS]. As executives of the nation's largest public pension fund, your commitment to stop purchasing bonds from Exxon can set a powerful example for investors who understand the financial risks posed by its climate change. Ending the purchasing of bonds from Exxon will protect the economic security of millions of Californians who depend on the stability of CalPERS investments.”
For example, Exxon recently announced a new public bond offering with a maturity date of 2074, well past CalPERS’ 2050 goal for portfolio emissions in line with 1.5 degrees Celsius global warming. Pensioners and union representatives raised concerns that any new Exxon bonds would undermine climate solutions touted by the Fund.
“Exxon's inability to align its business model with the energy transition makes it an unsound investment,” said Christina Livingston, a co-chair of California Common Good. “That is why shareholders are so concerned with Exxon. This is not about ideology or moral convictions, it's about the fact that Exxon has no plan for how to stay relevant as a business.”
Exxon has rebuffed CalPERS many attempts at engagement. According to a new report from the Institute for Energy Economics and Financial Analysis, “the need for action is heightened by fossil fuel companies’ long history of rejecting good-faith investor engagement on issues of climate risk.”
In addition to public testimony, members of California Common Good, the Sierra Club and others delivered a letter signed by about 2,000 beneficiaries and supporters. Current and future pension holders wrote:
”Purchasing bonds from Exxon is risky. Whether ExxonMobil fails to repay the bonds or its polluting activities contribute to diminishing returns across the economy, CalPERS beneficiaries will be left holding the pursestrings…The money saved for worker retirement, the raw material with which many private equity and hedge funds do their often-destructive work, could instead be harnessed to provide adequate, affordable housing for working families and buttress support for essential taxpayer contributions to public-sector pension funds.”
Growing Concern
A recent poll of US retail investors shows that across the political spectrum, investors believe that climate risk is financial risk: "And critically, three out of four investors (77%)—including 61% of Republicans—explicitly believe that “environmentally responsible companies are more likely to succeed financially.”
At the end of May, CalPERS and CalSTRS joined major investors to cast votes against the members of ExxonMobil’s Board of Directors at the corporation’s Annual General Meeting. The powerful “No” votes followed calls from California Common Good to take action to reduce exposure to Exxon to protect retirement security.
In March, Theresa Taylor, CalPERS President, told CalPERS investment staff that CalPERS needed a plan around Exxon, given that engaging with the corporation has not led to any change. “I think we need a plan, and that plan needs to include whether or not we keep these companies [Exxon] in our fund,” Taylor said at the meeting.
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About California Common Good:
California Common Good (CCG) is an innovative coalition of labor, community and environmental groups, anchored by the Alliance of Californians for Community Empowerment (ACCE), United Teachers Los Angeles and AFSCME 3299. CCG is advancing coalition campaigns for housing justice, workers rights and climate action, with an emphasis on the interests and needs of low-income and working-class communities of color. Central to our strategic approach is working to hold big corporations accountable to the common good.
