Thermal coal companies make up only a handful of the California State Teachers’ Retirement System’s (CalSTRS) funds — about $1.5 million of the pension’s $186 billion portfolio.
CalSTRS cited, among other things, coal’s impact on the environment as the pension’s reason for divesting.
“We determined that given the financial state of the industry, the movement of the regulatory landscape and coal’s impact on the environment, its presence reflects a loss of value,” Hendricks said in a statement.
“We will now move ahead to determine the fiduciary appropriateness of non-U.S. thermal coal companies in the CalSTRS portfolio and make an additional decision based on those findings,” Hendricks added.
Four coal companies will be affected by CalSTRS’ decision: Cloud Peak Energy, Hallador Energy Company, Peabody Energy Corporation, and Westmoreland Coal Company.
The coal industry is getting pummeled by both stouter regulations and by natural gas’s growing share of the energy market.
The pressure has prompted the U.S’ second largest coal producer — Missouri-based Arch Coal — to file for Chapter 11 bankruptcy last month in a last ditch effort to cut $4.5 billion in debt.
“After carefully evaluating our options, we determined that implementing these agreements through a court-supervised process represents the best way to solidify our financial position and strengthen our balance sheet,” John W. Eaves, the company’s chairman and CEO, said last month in a statement.
The fund’s next move is to determine whether to sell off all of its non-U.S. coal companies.
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