Divestment Doesn't Change Company Behavior, Pension Managers Say

(Bloomberg) -- Managers of the California State Teachers’ Retirement System and the New York State Common Retirement Fund said they oppose divesting from controversial companies because it doesn’t change corporate behavior.

“Divestment hasn’t made the world a better place,” Christopher Ailman, chief investment officer of CalSTRS, the second-largest U.S. pension fund with about $225 billion in assets, said Tuesday at the Milken Institute Global Conference in Beverly Hills, California.

Ailman and Vicki Fuller, CIO of the New York fund, said they face increasing political pressure to divest from companies including those in oil and banking, as well as gun retailers and others.

“If we divest from guns, we don’t change the equation,” said Fuller, whose fund has about $192 billion in assets.

They said the goal is to engage with companies to adopt corporate governance, environmental and social policies because those are the ways to affect share values.

One area of focus is to push companies to look at their earnings potential beyond quarterly periods, Ailman said.

“If we divest, we don’t have a place at the table and we don’t change behavior,” Fuller said. “We do need our companies to be thinking long term about how they are going to be able to continue to generate their earnings.”

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