By Barbara J. Parker
Oakland, CA – California has long been a leader in the fight against climate change. Having already divested from coal, and given the climate crisis we witness every day, it is past time for the state to put its money where its mouth is and move decisively to completely divest large public pensions from the fossil fuel industry.
Ending funding of this industry is critical to meet local, national, and international climate goals. It’s also consistent with my Office’s efforts to hold the industry accountable for decades of climate deception and the harms that conduct caused our communities. Six years ago, my Office joined other cities and counties in filing lawsuits on behalf of the People of the State of California to do just that, but due to the complexities of our court system, many of those lawsuits are moving slowly.
Thankfully, Senate Bill 252 provides California’s legislators an immediate opportunity to take real steps to end public investing in this industry. SB 252, the CalPERS and CalSTRS fossil fuel divestment bill, would contribute to international efforts to stop the fossil fuel industry from wreaking havoc on our environment and our communities. Divestment is urgently needed; UN Secretary Guterres recently quipped, “New funding for fossil fuel exploration and production infrastructure is delusional.”
CalPERS and CalSTRS are pension funds for public employees that together serve approximately three million members and collectively control over $773 billion. Their prior coal divestment did not harm the pension funds’ capacity to meet commitments to pensioners. Divesting from other fossil fuel companies similarly should not harm those commitments.
Divestment is also about economics. Fossil fuel companies are no longer a wise investment. Since 2010, market values of the four largest fossil fuel companies have dropped by more than 50 percent. A 2021 analysis found shares of ExxonMobil alone lost 47 percent of value since 2016, while the S&P 500 gained 84 percent.
A 2022 study estimated the global fossil fuel industry faces over $1 trillion in stranded assets, which are predicted to suffer from premature devaluation, in coming years. Divestment is thus financially prudent, consistent with public pension funds’ fiduciary duties.
SB 252 would align California with nearly 1,600 public and private institutions worldwide that have already committed to some level of fossil fuel divestment. The University of California has fully divested, as have major cities including Oakland and San Diego. Wealthy investment funds like BlackRock, the world’s largest asset manager which is responsible for over $8.6 trillion, concluded divestment does not harm clients’ bottom line – if anything, it modestly improves their financial positions.
Our planet needs to slash fossil fuel use by nearly two-thirds by 2035. Meeting these goals will be impossible if funding for fossil fuel projects continues apace. Research shows that 90 percent of coal reserves and 60 percent of oil and gas reserves must remain underground to stave off the worst effects of climate change. As the IPCC urgently warns, “there is a rapidly closing window of opportunity to secure a livable and sustainable future for all.”
Finally, divesting from fossil fuel companies is the right thing to do to protect California’s frontline and fenceline communities. The City of Oakland is in one of the top five most affected counties in the state. And nearly 92 percent of people living within a mile of ongoing or new fossil fuel development in California are Black, Indigenous, and/or other People of Color. Due to long legacies of systemic racism, these communities are disproportionately impacted by climate change, climate harm, and pollution. Continuing to invest in fossil fuels perpetuates these injustices.
The Legislature must pass SB 252 this year. This bill is both financially prudent and essential to meeting our collective climate goals.
Barbara J. Parker is the elected City Attorney of Oakland.