Jane Vosburg is a member of the California State Teachers' Retirement System who campaigns for divestment with 350 Sonoma County and Educators for Fossil Free Divestment. On November 7, she spoke to the CalSTRS Investment Committee meeting in West Sacramento.
Thank you for allowing me this time to comment, and thank you, Sharon Hendricks and Paul Rosenstiel, for requesting educational guest speakers to be a part of CalSTRS' focus this year on sustainability. Finally, thank you, Jack Ehnes, for inviting Al Gore, David Blood, and Tom Steyer to February’s meeting.
We are living in unprecedented times. Last week the Intergovernmental Panel for Climate Change issued its fifth report, laying out the dire, irreversible consequences of global warming if we fail to reduce carbon emissions now. This September, the $860 million Rockefeller Foundation—who owes its very existence to oil—announced its divestment from fossil fuel, and last week UN Secretary General Ban Ki-Moon stated that he has "been urging companies like pension funds or insurance companies to reduce their investments in a fossil-fuel based economy [and shift] to renewable sources of energy." And all this takes place while humanity stays on course for raising the global temperature by 6 degrees Celsius, which would make the planet uninhabitable. These are indeed unprecedented times.
We CalSTRS investors urge you, the Investment Committee, to support a reasonable resolution to immediately freeze any new investments in the fossil fuel industry and sell all other such funds over a period of five years.
This crisis is like no other, and it is too urgent to allow the CalSTRS stated preference for engagement. As New York State Comptroller Thomas DiNapoli, trustee of one of the largest pension funds in the country, concludes, "Investors have repeatedly engaged fossil fuel companies, but the results have fallen short given the threat it poses to the entire global economy."
Our fossil fuel investments are threatened by a looming carbon bubble. It is becoming common knowledge that to keep the global temperature from exceeding the dangerous level of 2 degrees Celsius, 80% of the proven fossil fuel reserves must stay in the ground, resulting in an estimated 20 trillion dollars of stranded assets. Many investors may feel confident that they will be able to sell high-carbon investments just before their value erodes significantly and the carbon bubble bursts, but Republican Henry Paulson, who was Secretary of the Treasury when the housing bubble burst, disagrees. He warns, "We’re making the same mistake today with climate change. We’re staring down a carbon bubble that poses enormous risks to both our environment and economy.… We can see the crash coming, and yet we’re sitting on our hands rather than altering course. We need to act now."
Other investors may fear that divestment from fossil fuel stocks would reduce performance. However, a study from Impax Asset Management shows that over a six-year period investors could have substituted clean energy stocks for fossil fuel stocks without any negative impact on performance.
Another study from a financial consultant agency, the Aperio Group, found there is minimal risk (0.01 percent increase) and no appreciable effect on returns by comparing the standard Russell 3000 index fund and the same fund excluding all companies in the industry category "oil, gas, and consumable fuels." Yet another recent study by S&P Capital IQ shows that, had divestment occurred ten years ago, a $1 billion endowment would have yielded $119 million more than the index with no divestment. So divestment poses absolutely no threat to our portfolio performance.
We live in unprecedented times and we believe you should heed the warnings of financial institutions such as HSBC, IMF, Citibank, and the World Bank that the fossil fuel industry is creating a carbon bubble that is a serious threat to our portfolios. It is your fiduciary duty to divest from fossil fuels to protect our investments, and it is your ethical duty to take a critical step to protect our children’s future.
Finally, we request that you enter as an agenda item our resolution for fossil fuel divestment for a meeting in the near future.
Please click here and join Jane and other teachers to petition CalSTRS to divest.
(Photo of CalSTRS headquarters by Lisa Ouellette/Flickr, some rights reserved)