Calpers Rejects Plea to Divest From Carmakers Over Emissions
(Bloomberg) -- The California Public Employees’ Retirement System opposes plans by the Trump administration to relax vehicle emissions standards. But don’t expect Calpers to exert its muscle by dumping shares of car makers.
The nation’s largest pension system has rejected a call to divest from vehicle manufacturers that follow the president’s agenda to roll back fuel efficiency standards, according to an April 20 letter. The dismissal was in response to a divestment plea from California Representative Mark DeSaulnier earlier this month. Instead, Calpers plans to “actively call on our portfolio companies to adopt better standards,” according to the letter by Marcie Frost, the fund’s chief executive officer.
“While divestment may serve to bring attention to an important issue, it generally comes at a high cost in terms of both investment performance and our ongoing ability to influence corporate behavior,” Frost wrote in Friday’s letter. ”Engagement is by far a more effective means of communicating concerns to portfolio companies.”
But the letter didn’t persuade DeSaulnier to back down. On Tuesday, joined by 10 Democrats from California, the congressman again called for the state pension system to divest its portfolio of car companies that loosen emissions standards.
Calpers should take such action to demonstrate the importance of fuel-efficiency standards and the groundbreaking role the state has played in this area, the lawmakers wrote in a letter.
The Trump administration hopes to roll back fuel standards to those established before President Barack Obama came into office. The former president’s stance on fuel economy was inspired by California’s strict emissions requirements.
“California has long been the leader on clean air, and it is incumbent on public retirement funds, like Calpers, to uphold its stated values of social responsibility and sustainability and hold accountable any auto manufacturer that seeks to skirt public health for short term profits,” DeSaulnier said in an email Tuesday to Bloomberg News.
Megan White, a spokeswoman for Calpers, declined to comment on the letter.
Calpers, which has about $352.6 billion in assets, has become a leader in using its investing weight to push companies on environmental, social and governance issues.
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