CalPERS Board President Sean Harrigan and State Controller Steve Westly have written a letter to the board urging it to use its financial clout in order to pressure the auto industry into accepting the new emissions laws, according to the Wall Street Journal (WSJ). Automakers have threatened to fight the California rule that would force them to build vehicles that have reduced emissions by 2016.
The letter, that was expected to be sent Monday, suggests that if its demands were not met, CalPERS should engage the companies through proxy battles alongside other investors, according to WSJ.
The state’s new emissions standards is the first one that aims to curb auto emissions of gases such as carbon dioxide. Several Northeastern states, as well as Canada, are considering similar moves, however. The California law would triple the number of cars under emissions limits, according to the WSJ.
The letter is aimed specifically at the Alliance of Automobile Manufacturers, a large Washington-based trade group that includes General Motors, Ford Motors, DaimlerChrysler, Toyota, Volkswagen, BMW, Mitsubishi, Porsche and Mazda. CalPERS has over $838 million invested in these companies, according to the WSJ. This group has argued that the measure, set to phase in on vehicles between 2009 and 2016 and that would require a 30% reduction in emissions, would raise the price of automobiles while not actually offsetting worldwide emissions. It also argues that only the federal government has the power to regulate emissions, and thus California is overstepping its bounds.
This is not the first time that CalPERS, the nation’s largest public pension fund, has decided to throw its weight around in order to enact change. Most recently, CalPERS joined with other pension funds in trying to get more shareholder power in electing board members at the Walt Disney Co. (See Pension Funds Propose Enhancing Shareholder Power at Disney ). At the last annual meeting, multiple pension funds called for CEO Michael Eisner to step down from his post, citing poor performance. Eisner lost his chairman title following this action, and later said that he would resign from the executive position in 2006 (See Beleaguered Disney Head Tries to Shore Up Support ).
However, internal questioning over the CalPERS policy of activist proxy voting has also arisen, with Harrigan questioning the fund’s policies on such actions (See CalPERS Rethinking Proxy Voting Campaign ).