Photo of a large group of people gathered to lobby for the Climate Accountability bill package. They are under large trees on the Sacramento Capitol grounds and hold a sign that reads, "Divest California's Public Pensions." Photo by Brooke Anderson.

California’s Public Pension Divestment Bill – SB 252 – Confirmed through Senate Appropriations, Now Heads to Senate Floor

It’s the “climate bill that could:” SB 252’s tremendous momentum demonstrates that California, the world’s sixth largest economy, is prepared to lead on climate and fiduciary responsibility, taking the helm of the financial industry’s shift toward fiscally responsible investing.

May 18, 2023
Contact: Shana DeClercq | | (415) 376-3746
Photos available here | Banner photo by Brooke Anderson

SACRAMENTO | Today, SB 252 – a widely-supported bill for CalPERS and CalSTRS to phase out fossil fuel investments – passed the Senate Appropriations Committee, and now heads to a full Senate floor vote, potentially as soon as next week. 

This comes as politically-motivated extremists work at the federal and state levels in attempts to ban common sense responsible and sustainable  financial risk assessments, costing taxpayers millions. California, the world’s sixth largest economy and holder of the nation’s two largest public pensions – CalPERS and CalSTRS – is poised to lead the financial sector into a new era of financial prudence and risk-managed growth by divesting the funds of their toxic fossil fuel holdings.

Californians are living through record fires and floods, and are rising up to demand our public pension funds stop bankrolling climate chaos. Investments have better returns when their fund structure accounts for environmental and social factors and risks, especially the impact on workers and communities. CalPERS and CalSTRS should not be hiding risks to our  from the public– including how the companies they invest in treat workers and pollute the environment. Continuing to allow toxic and volatile fossil fuel investments to linger translates to riskier outcomes for our retirees, and that endangers the financial security of us all. Divestment is the only viable way forward – with divestment, it’s not if, it’s when. And for California, with SB 252’s incredible momentum, the time is now. We’re ready and excited to see this move to the Senate floor.

 –Miriam Eide, Coordinating Director, Fossil Free California

The good news for California students, teachers, workers, and retirees, is multiple studies have shown that divestment leads to neutral or positive returns. This effect is amplified because divestment removes toxic and risky assets from CalPERS and CalSTRS’s portfolios. Had CalPERS and CalSTRS divested in 2009, the funds would have gained $17.4 billion by 2019, or $6,072 more per CalPERS member and $5,752 more per CalSTRS member.

Research shows that portfolios that exclude fossil fuels have less risk with higher long-term returns. The MSCI World Index that excludes fossil fuel companies has outperformed its standard index over the past 13 years. CalPERS and CalSTRS corporate bonds finance fossil fuel expansion. Yet oil and gas companies already own fossil fuel reserves that will become stranded assets. Assets can become stranded very quickly: CalPERS’ $385 M and CalSTRS’ $323 M in Russian fossil fuel stocks quickly fell to a value of zero, thanks to US government sanctions. Removing risky fossil fuel stocks improves diversification  and allows additional growth of the portfolio’s value. Divestment fulfills CalPERS and CalSTRS fiduciary duty and it helps the pension’s reach their net-zero goals.

Clair Brown, Professor of Economics, UC Berkeley

As Professor James Stone wrote in April, “Fossil fuels are a losing bet. Why are CalPERS & CalSTRS still investing in them?” To date, over 1,550 institutions representing more than $40 trillion in assets have committed to some level of fossil fuel divestment. 

Divestment works. As reported by Harvard Business School, a 2023 study of coal divestment found that Bank divestment policies that target coal reduced carbon dioxide emissions: by reducing capital expenditures, facilities are decommissioned, and CO2 emissions ultimately fall. 

Union Yes

Multiple studies show that decarbonization or divestment will result in a net increase of jobs. Research out of the University of Massachusetts-Amherst shows that employment in California’s decarbonizing economy will result in large job gains.

Unions representing more than 470,000 California workers support SB 252. Union support includes California Faculty Association, CFT- Union of Educators & Classified Professionals, California Nurses Association, AFSCME California, Los Angeles College Faculty Guild, and California Community College Independents, among others.

An Offramp From California’s Rapidly Intensifying Climate Crisis

Californians are facing climate whiplash – trying to navigate lives, jobs, and families, mopping up from record-breaking flooding (estimated at $30 billion in damages in 2023)  while simultaneously girding themselves for the ever-lengthening wildfire seasons across the Western U.S. The IPCC urgently warns the global community that “there is a rapidly closing window of opportunity to secure a liveable and sustainable future for all. Limiting warming to 1.5°C will require rapid, deep and immediate greenhouse gas emissions reductions in all sectors this decade.” For California’s teachers, workers, and retirees, climate chaos isn’t a someday problem, it’s a right now crisis. 

We have known for decades about the climate crisis. This is not news. The time for patience was 25 years ago. Our options are rapidly shrinking and we can’t afford to waste a second more. Divestment epitomizes this. Polite engagement is wasting our time and dragging us all down. Fossil fuel companies will always be fossil fuel companies, and we can’t refuse to take action thinking they’ll be something else. The only way to stop them is to put our money where our mouth is. We call on California legislators to divest now, to take power away from them. The California government should protect teachers, students, and the people of California, not the fossil fuel industry.

– Zara Ahsan, Youth vs. Apocalypse

California is positioned to move swiftly on SB 252, and to lead the nation on fiduciary responsibility, pension stability and growth, and a fossil free future for its students, workers, retirees, and communities. 

SB 252 will move quickly to a full Senate floor vote. For additional information, quotes, or interviews, contact | (415) 376-3746