Global fossil fuel emissions in May reached a record high, a bleak milestone that should alarm California public school teachers. Despite working to prepare young people to lead healthy, happy and successful lives, teachers are unwittingly contributing to climate change through our pension fund investments.
As stewards of the next generation, we must demand that the California State Teachers’ Retirement System, known as CalSTRS, fully divest from fossil fuels.
With more than $240 billion in assets, CalSTRS is the second largest public pension fund in the United States and, consequently, a tremendously powerful institutional investor. A growing movement of young people and teachers have been calling on CalSTRS to fight climate change more aggressively by divesting the more than $6 billion it invests in fossil fuels. Divestment by CalSTRS would help curb carbon emissions by putting economic pressure on fossil fuel companies while also sending the message that the industry itself is morally indefensible.
A growing number of institutions — notably the University of California, New York City teachers and public employees — have committed to divesting from oil, coal and gas. Even the Catholic Church has asked Catholics to divest from fossil fuel industries. Yet CalSTRS refuses to make a similar commitment.
In a May 20 email, a CalSTRS communications staff member wrote that “divestment is a last-resort action that can have a lasting negative impact on the health of the Teachers’ Retirement Fund, while [also] severely limiting our ability to shape corporate behavior for long-term sustainable growth.”
Divestment is a smart financial strategy. During the past few years, the return on investment for oil and gas has been quite shaky, and continued price volatility — such as the brief but staggering moment in April when oil prices dipped below zero — make fossil fuels an increasingly risky gamble. Moreover, a study by the Toronto-based Corporate Knights found that over the past 10 years, CalSTRS lost $5.5 billion because it kept its fossil fuel investments. Such numbers should allay fears that divesting might somehow harm our pension benefits.
Divesting is the moral thing to do. As teachers, our goal is to support our students, so they flourish now and in the long term. We should not be complicit in investment activity that jeopardizes their future.
Divestment would also foster racial justice. According to the Fourth National Climate Assessment from 2018, low-income communities and communities of color are “disproportionately affected” by climate change. The costs of fuel extraction and refining to human health and the environment often fall heavily on communities of color, perpetuating a social dynamic where we value some lives while treating others as disposable.
Arguments that divesting would harm our retirement security are not convincing. Actions by other large institutions, such as the University of California, which calls fossil fuels a “financial risk”, suggest many see divestment as a safe and wise long-term investment strategy. And assumptions that increasing demand in places like China and India will eventually drive oil and gas prices higher seem to ignore the economic and political upheaval that will flow from a changed climate and aftershocks of the coronavirus pandemic.
By reducing available capital, divestment will help push the oil and gas industries to transition more quickly to the behavior CalSTRS says it is trying to encourage — “long-term sustainable growth.” CalSTRS portfolio manager Brian Rice recently told the Environmental Defense Fund that “at some point, access to capital will become limited — it’s just a matter of when.”
CalSTRS itself acknowledges the existential threat of climate change and recognizes that at some point divestment must happen. Why not now?
CalSTRS publicly declares that we need to transition to a low-carbon economy that benefits all. If that is the case, then CalSTRS cannot continue investing in an industry that is inextricably linked to environmental degradation, economic inequality and racial injustice.
The CalSTRS board is set to meet this week from July 15 to 17. Teachers should use this opportunity to urge CalSTRS to side with those who want a future for our planet and choose to divest from fossil fuels.
Heath Madom teaches 10th-grade humanities at Oakland Technical High School in the Oakland Unified School District. He is also a member of the adult advisory board for Youth vs. Apocalypse, a youth-led environmental justice organization.
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