Staff members at the largest retirement pension in the U.S. believe the fund should continue investing in the Dakota Access pipeline despite calls for the group to sell off assets associated with the contentious project.
California Public Employees’ Retirement System (CalPERS) staff said divesting stocks of companies connected to the so-called DAPL might give the perception the fund is fighting companies that cause global warming, but it also limits CalPERS ability to change corporate behavior through engagement.
They were responding to Democrats calling on California to pass legislation compelling the $300 billion fund divest from all companies investing in the project. The bill would compel CalPERS to sell off shares in Dakota Access LLC and Energy Transfer Partners, the company behind the 1,178-mile-long project. It would also have to sever relations with Bank of America, Wells Fargo, and JPMorgan Chase, among others.
“There is considerable evidence that divesting is an ineffective strategy for achieving social or political goals, since the consequence is generally a mere transfer of ownership of divested assets from one investor to another,” staff said Monday in its recommendation. The CalPERS Investment Committee plans to meet Feb. 13 in to discuss the bill’s merits.
Citi Group and TD Bank of Canada are also being pressured by anti-fracking activists and members of the Standing Rock Sioux to halt any and all monetary backing of the company responsible for constructing the DAPL. They believe the project, which is slated to run underneath the Lake Oahe, could trample the tribe’s sacred ground and poison its water supply.
Opposition to the multi-billion pipeline ratcheted up recently after President Donald Trump signed a pair of executive orders in January approving the construction of the DAPL and Keystone XL. The Army Corps of Engineers, through the Obama administration, rejected the route Dakota was supposed to take across Lake Oahe.
Democrats have targeted CalPERS in the past. Democratic Congressmen Ted Lieu and Mark DeSaulnier, for instance, sent a letter to the fund’s CEO Anne Stausboll in March 2016 suggesting the pension fund’s decision to invest in Exxon Mobil is “morally suspect.”
The letter urged CalPERS to purge all of its assets in the oil company — if not for the climate, the lawmakers argue, then at least to put the pension fund in line with other major institutions choosing divestment. The fund is making the argument against those calling for divestment from DAPL that it made against Lieu and DeSaulnier: CalPERS will lose the “ability to influence companies if we divest.”
CalPERS promised it would use an “aggressive” three-prong strategy against companies like Exxon and DAPL that includes “engagement, where we push for change at companies,” advocate companies make changes to better Earth’s climate, as well as integrate a company’s pro-climate decisions into the pension’s own investment decisions.
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