Mar 01, 2022
On February 9, 2022, The California State Teachers' Retirement Systems (CalSTRS) convened a symposium about sustainability and investments, with speakers from CalSTRS, other financial experts, and several groups favoring divestment. This symposium came about from a request last year by State Superintendent of Public Education Tony Thurman requesting the CalSTRS Board place on the agenda a vote about fossil fuel divestment. At the symposium, the public had a chance to learn about how CalSTRS thinks their engagement with fossil fuel companies can lead to positive impacts for the climate.
Net zero by 2050 is way too little, way too late. In order for the planet to survive, we need to slash ALL emissions in half by 2030. We need to cut emissions 7% per year every year until 2050.
Our conclusion: CalSTRS is living in a world of magical thinking: they believe naively that by asking nicely, they can change the behavior of companies bent on polluting low-income communities and destroying the planet for profit.
The leaders of CalSTRS investment staff argued that their strategy of engagement is already making progress with the fossil fuel giants, and they claimed that the best way to address the climate crisis is to work collaboratively with those companies.
Discussing progress, Chief Investment Officer Chris Ailman said,
We've gotten fossil fuel companies, we've gotten utilities, to adopt net zero by 2050 pledges, and I know many of you say that's too long, but those companies are reducing their greenhouse gasses today. They are already starting and making a difference.
Discussing how to get change from these companies, Kirsty Jenkinson, the head of sustainability for CalSTRS, argued,
Change happens from the top, and recognizing that there are different strategies to create change and companies, it just has to start at the very top and we were very proud of the role that we and many other investors who supported it took the decision to change the leadership of Exxon Mobil from the top...Major technological innovation at scale to capture carbon and remove carbon is going to be such an important part of the ledger for achieving net zero and it is doable.
Discussing CalSTRS' theory of how to get change to happen, Ailman said,
This transition can't be a fight. It's going to be a huge energy transition off of fossil fuels to something else. And what we need to do is really work with people. The more we make it a fight, the more we're going to see a rebellion on the other side, and then we're going to have a whole problem.
While Ailman cites the net zero 2050 commitments of fossil fuel companies, such as Exxon-Mobil, as a major achievement, that company's net zero commitments ONLY cover the emissions caused by their operations, and not those coming from the burning of their product. In the world of our climate crisis, this pledge is laughable; burning carbon as fuel is the greatest contributor to green-house gas emissions, and Exxon has effectively washed its hands of the problem.
A few years ago the fossil fuel industry stopped promoting outright climate denialism. Their new strategy is to position themselves as part of the solution to the crisis they have caused, and to focus on "net zero by 2050." Much of the "net" in net zero comes from unproven technologies such as carbon capture. Even with commitments of net zero by 2050, the fossil fuel industry continues to fight against climate friendly legislation. They continue to explore for more oil. They continue to build new fossil fuel infrastructure.
While Ailman claimed that divestment doesn't work, at the symposium he told the story of meeting with an Indian fossil fuel company and telling them about the divestment movement.
They told us that they weren't even aware that some of the universities divested because they never spoke to them, and that we were the first people who actually educated them about the divestment movement and that that was a threat to them. And they did open their eyes, and they also want to know, what do we as shareholders want? And they began a dialogue.
In other words, in this case, the threat of divestment was a powerful incentive to action.
An argument could thus be made that smart strategic divestment, with credible threats to divest when benchmarks are not met, might have some impact. Indeed, that is the strategy New York State comptroller Tom DiNapoli took with that state's divestment from fossil fuels.
Jenkinson admitted at the forum that CalSTRS has no clear benchmarks for when it will decide to give up on a company. One clear benchmark would be that the company is no longer lobbying to undermine climate legislation. On that metric the top fossil fuel companies, including Exxon-Mobil, are continuing to fail miserably. Another could include measurable decreases in overall emissions. A third would be marked reductions in capital outlay for new search and drilling operations.
However, even if the fossil fuel industries kept their pledges to reach net zero by 2050, and there is serious doubt that they will, net zero is not enough. We can't slow our move away from emitting greenhouse gasses because we think some future technology may take away some carbon. We need to stop emitting. Net zero by 2050 is way too little, way too late. In order for the planet to survive, we need to slash ALL emissions in half by 2030. We need to cut emissions 7% per year every year until 2050. We also need whatever sinks we can get.
Unfortunately, we cannot get to the required speed and level of emissions reductions without a fight with the fossil fuel industry. The history of social change shows clearly that when a group benefits from a form of exploitation, they need to be pushed to give up those benefits.
As people were fighting to end slavery in the 19th century there were many abolitionists who believed that moral arguments about the evils of slavery would eventually reach the hearts of the slave owners and the politicians who did their bidding. Opposing that idea, the great abolitionist Frederick Douglass uttered his most famous lines,
Those who profess to favor freedom and yet depreciate agitation, are people who want crops without ploughing the ground; they want rain without thunder and lightning; they want the ocean without the roar of its many waters. The struggle may be a moral one, or it may be a physical one, or it may be both. But it must be a struggle. Power concedes nothing without a demand. It never did and it never will.
Twenty one year old panelist Nalleli Cobo, who has fought against neighborhood fossil fuel companies since she was 9 years old, and who is in remission from stage 2 cancer, spoke of the damaging effects of fuel production on students and teachers in California, especially those from low-income communities and communities of color. She stated,
Over 580,000 Angelenos live within a quarter of a mile or less from an oil or gas well and 93% of the population are people of color....It's so important that we divest from fossil fuels. It's affecting our health, our safety and our environment...I think it's important that the teachers' money doesn't go to killing kids, it doesn't go to damaging their organs or their health.
Other damaging effects of burning fossil fuels happening right now are the recent explosions in the number of wildfires across the West, the increasing number of days when the air quality reaches hazardous levels, and the worst drought in 1200 years.
University of California Chief Investment Officer, Jagdeep Singh Bacheer, ended the symposium by asking CalSTRS to engage with its stakeholders and really listen to their concerns about the fossil fuel industry.
Ailman and Jenkinson appear to be very competent and knowledgeable about investing in general, and about investing in sustainable stocks. But this forum showed that they do not have a deep understanding of how social change happens. It is pure magical thinking to suppose that the fossil fuel companies that right now are undermining climate legislation can be talked into voluntarily adopting changes at the level and speed needed to keep our planet livable for our species.
CalSTRS members, who have voted overwhelmingly through their unions to pass resolutions asking for fossil fuel divestment, have enough of an understanding of how politics works to know that now is the time for CalSTRS to divest from fossil fuel companies. The board can make this choice at their next meeting. And if they don't, we can work for passage of California's SB 1173, which will require them to do so.
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