The State Worker

Chronicling civil-service life for California state workers

December 20, 2012
Column Extra: CalPERS weighs in on investments, social good

With just 400 to 450 words for our weekly State Worker column, much of what we learn each week never sees print. Column Extras give you some of the notes, the quotes and the observations that inform what's published.

Today's column chips off a small piece of the tension that exists between public pension funds' obligation to transparency and their marriage with less-than-open Wall Street partners to achieve the shared mission of hitting their investment targets.

We contacted several sources as we reported the column. One was CalPERS, which sent us the following statement. Since we couldn't get it into the column, we wanted to give spokesman Joe DeAnda's comments an airing, along with more thoughts from a few other sources we interviewed on Wednesday:

CalPERS

CalPERS operates in a unique and complex social-economic environment. Our investment in a company does not necessarily signify that we approve of the company's policies, products, or actions. CalPERS, nevertheless, wants companies in which it invests to meet high corporate governance, ethical, and social standards of conduct. We believe that this generally will promote superior long-term investment performance. CalPERS has a distinguished history of constructively engaging companies that fail to meet CalPERS standards of conduct and we prefer constructive engagement as a means of affecting the conduct of entities.

+++++++++++++++++++++++++++++++++++++++++++++++

Susan Sears, former Calfire employee and current president of the 33,000-member California State Retirees

On whether pension funds should weigh the social impacts of a company's goods or services when considering investments:

For me, it comes down to personal responsibility in our own lives. We can individually choose to boycott (a company), and we should. ,,, But the way investments are now, they're global and extremely complex. There's no way to pull these holding companies apart.

On the Sandy Hook school shootings and how it led to criticism of CalSTRS' stake in the holding company whose subsidiary manufactured the rifle used in the killings:

The humanitarian side would say you're profiting from other people's misery. But it's their (the gun users') choice. We didn't cause that to happen

+++++++++++++++++++++++++++++++++++++++++++++++

Phil Sherwood, former CalSTRS employee and current executive director of California State Retirees

On to what degree public pension funds investments should be driven by social concerns:

The issue is defining "social responsibility." Do you define it Collectively or individually? And it's hard to divest from the part you don't like. ... It's a balance. Think globally, act individually. I'm not going to buy an AR 15, but I can only urge from the sidelines to divest from socially unacceptable enterprises. But if we limit (the pension funds) too much, they'll have trouble hitting their discount rates.

We want PERS and STRS to make their discount rates. And yet do we want to do business with terrorists? Gosh darn it, that's the dilemma.

+++++++++++++++++++++++++++++++++++++++++++++++

Harvey Robinson, retired CalPERS employee and president of the 28,000-member Retired Public Employees Association of California

On CalPERS position on socially-conscious investing:

In terms of maximizing profits versus social consciousness, I'm sure the board wants to follow its social invest policy, but it can be difficult for the public to follow.

I don't know if CalPERS has hedge fund investments in armaments because the investment annual report doesn't have that degree of detail. We're not aware.

On measures he would like public pension funds to adopt:

I think it would be helpful to know about the three main investments of a specific company, but it all depends on how CalPERS board sees it. They decide.

On the slippery slope of socially-conscious investment policy:

Look at investments like Apple and stories about its plants in China. Look at Wal-mart and stories about it's wages. Socially-conscious investing could spin out in many ways ...
I suspect that most true-blue union members would boycott Wal-Mart. But they're OK with having Wal-Mart in their pension's portfolio? To me that's a bit of hypocrisy.

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About The State Worker

Jon Ortiz The Author

Jon Ortiz launched The State Worker blog and a companion column in 2008 to cover state government from the perspective of California government employees. Every day he filters the news through a single question: "What does this mean for state workers?" Join Ortiz for updates and debate on state pay, benefits, pensions, contracts and jobs. Contact him at (916) 321-1043 and at jortiz@sacbee.com.

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