Pulling out of big oil
Activists urge state pensions, university investments to look to clean energy
A movement is afoot to divest city pension funds and university endowments from fossil-fuel companies.
Organizers of the campaign, including students and climate-change activists, hope to tarnish the brands of oil, gas and coal companies. Ultimately, their goal is to move hundreds of billions of dollars from economic activities that cause climate change toward renewable, low-carbon investments.
Divestment activists are targeting California’s state pension systems, the California Public Employees’ Retirement System, or CalPERS, and the California State Teachers’ Retirement System, CalSTRS. Both have enormous holdings of fossil-fuel company stocks and bonds.
The University of California, which administers its own giant endowment and multiple pension funds, is also being pressed to ditch oil, gas and coal securities.
Last month, students converged on the UC regents governing-board meeting at the Sacramento Convention Center.
“We’re hoping to convince the regents to divest the UC system from the 200 largest publicly traded fossil-fuel companies,” said Ophir Bruck, a junior at UC Berkeley who helped organize the action. “We’re not going to bankrupt these companies. It’s largely about hitting their reputation.”
CalPERS manages the retirement investments for most of the Golden State’s city, county and state employees, and has approximately $265 billion in assets under management. CalSTRS has $164 billion invested.
CalPERS, the nation’s largest pension system, owns shares in at least 292 different companies involved in oil, gas and coal exploration, production, refining and transport. About 10 percent of the market value of CalPERS’ stock portfolio is fossil-fuel investments. The pension’s largest fossil-fuel stock picks are U.S. corporations ExxonMobil Corp., Chevron Corp., and Schlumberger.
CalPERS also owns about $1.4 billion in oil, gas and coal company bonds. Through the bond market, CalPERS has financed the activities of companies like Nexen Inc., one of the largest exploiters of Canada’s massive oil sands.
CalPERS also owns tens of millions in company bonds financing TransCanada, which has battled environmentalists, landowners and scientists for a decade over its proposed Keystone XL pipeline, which would transport oil-sands extracts to Texas for global export.
The oil sands—thick deposits of bitumen and dirt from which oil can be extracted—can be refined into 168 billion barrels of oil. By comparison, Saudi Arabia has 264 billion barrels of reserves buried beneath it.
The scientific consensus is that, if such vast reservoirs of oil are tapped and burned, climate change very likely will destroy the conditions for life on Earth, causing spikes in temperatures, massive droughts, wildfires, rising sea levels and other catastrophic transformations of the biosphere.
Sabrina Fang, a spokeswoman for the American Petroleum Institute, said divestment by university endowments is misguided.
“The development of oil and natural gas in America has done more to create jobs and generate revenue than any other industry,” she said.
She called the current oil and gas boom in the United States an “unstoppable revolution … helping economic recovery.”
Climate activists have countered with their own research. A recent report by the Aperio Group, an investment-management company, urges endowments and pensions to “do the investment math” when it comes to the question of whether dumping fossil-fuel stocks negatively impacts earnings.
Aperio’s analysts conclude that “the impact may be far less significant than presumed,” and that exclusion of oil, gas and coal stocks is likely to change overall investment returns by only half-of-one-hundredth of a percent.
California’s massive pools of pension and university endowment wealth also have global reach. CalPERS money is invested in Russian energy giants like Gazprom and Lukoil and Brazil’s state oil company, Petrobras. UC pension funds are tied up with European and Chinese oil and gas companies.
Neither CalPERS nor CalSTRS have taken up the issue of a possible move to divest from carbon-intensive-energy holdings. Bruck said he’s hoping his coalition can press the UC regents to take up the issue in the fall and perhaps vote sometime next year.
Already, seven UC-campus student governments and the faculty Senate of UC Santa Barbara have voted in favor of divesting UC’s $71 billion in pension and endowment investments from fossil-fuel companies.
The total endowment holdings for the nation’s 831 largest colleges and universities is estimated to be $406 billion as of last year. ExxonMobil alone has a market capitalization of $401 billion.