Calstrs to Engage With Assault-Weapon Sellers First, Divest Last

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(Bloomberg) -- The California State Teachers’ Retirement System, the second-largest U.S. pension fund, voted unanimously to first engage with retailers of assault weapons before deciding whether to divest from them.

Calstrs, which oversaw $222.5 billion as of March 31, in 2013 began selling off shares of manufacturers of firearms illegal in California and completed that process two years later. State Treasurer and board member John Chiang has urged the system to also divest from sellers of assault weapons and bump stocks after the Las Vegas mass shooting in October.

“Let’s take the battle to where the money is,” said the treasurer, who’s running for California governor, during the meeting Wednesday in Sacramento. Engagement works better when backed up by the threat of divestment, said Chiang, adding that the fund would be the first among state pensions to adopt such a multistep process.

Under the plan approved by the board, Calstrs staff will develop a strategy to “highlight areas of firearm concern and applaud responsive companies,” as well as work with other institutional investors to target the retailers’ policies, according to board documents. Next could be voting against a company’s board, and then as a last resort, the system may consider divestment or customized indexes that exclude the sellers of firearms banned in the state and bump stocks, the triggering device used in the Oct. 1 massacre.

‘Collaboration’ Process

Board member Paul Rosenstiel, while supporting the move, questioned the efficacy of hiring two more staff members under the plan, citing as an example the limited shares the fund owns of Walmart Inc., the retail giant that recently amended its firearms policy.

“By ourselves, we are not going to be that influential,” he said.

Calstrs Chief Investment Officer Christopher Ailman told the board he’s meeting with institutional investors and asset managers on the issue. “Collaboration is already underway.”

Divestment Doesn’t Change Company Behavior, Pension Managers Say

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