(Bloomberg) — A California bill forcing the two largest US pension funds to divest an estimated $15 billion in oil and gas assets has quietly fizzled for the third straight year, but the influential state lawmaker behind the effort vowed to renew the legislation with a stronger alliance of climate activists.
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State Senator Lena Gonzalez, a Democrat from Los Angeles County, said she’ll reintroduce legislation next year to force the California Public Employees’ Retirement System and the California State Teachers Retirement System to dump their holdings in oil and gas companies. She shelved the bill this week after a committee in the legislature’s lower house sought to water it down.
“We think we’ll get an even broader coalition,” Gonzalez, the majority leader of the California Senate, said in an interview. “So it’s going to be more of a concerted effort, a lot more voices.”
The proposal stirred divisions among California’s Democratic supermajority by highlighting a choice between climate-change priorities and concerns that divestment would threaten the financial health of municipalities already burdened with pension-fund liabilities. Gonzalez’s bill also stalled last year after passing the state Senate.
Under this year’s proposal, Calpers and Calstrs would have been required to halt new investments in oil and gas companies next year and get rid of their existing assets in the sector by 2031. But the Committee on Public Employment and Retirement, chaired by Assemblymember Tina McKinnor, sought to extend the divestment deadline to 2045 among other provisions, Gonzalez said.
McKinnor’s office didn’t return a request for comment, nor did Calpers. The $504 billion pension fund has previously said it’s able to use its holdings in energy companies to push for changes that reduce their carbon emissions.
Calstrs, with about $338 billion in investments, didn’t immediately respond to a request for comment.
Gonzalez’s bill would have required Calpers and Calstrs to sell an estimated $15 billion in assets, according to a legislative analysis last year. A study this year said it would cause the “equivalent of a fire sale,” potentially forcing the pensions to sell assets at a loss.
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