In response to what it described as “the impact of federal and international sanctions”, the California Public Employees’ Retirement System (CalPERS) has adopted a plan to divest shares of the remaining public companies operating in specific segments of the Iran and Sudan economies. New investments in these companies would be blocked as well, according to the announcement.
“The cost of continuing to hold the stock of these eight companies is greater than the value of divesting them,” said Rob Feckner, CalPERS Board President. “Consistent with our fiduciary duty as trustees, we’re taking this step in the best interest of the Fund.”
George Diehr, Chair of the CalPERS Investment Committee, said: “We plan to mitigate and compensate for the cost of executing trades by implementing sales over time rather than precipitously. We also will use the sales of these company shares to adjust an allocation overweight in our Global Equity portfolio, and avoid the continuing engagement costs.”
CalPERS notes that strong sanctions adopted in 2010 by the federal government, the United Nations and European Union prompted the withdrawal of several large multi-national oil and energy companies from Iran and Sudan. The $236 billion pension behemoth once had up to $2 billion invested in 47 companies in the two countries, both targets of California State divestment laws enacted in 2006 and 2007. However, today CalPERS owns shares valued at approximately $160 million in only eight companies that fall within the parameters of the State’s Iran and Sudan divestment acts, according to the announcement.
CalPERS adopted an initial Sudan divestment policy in 2006. Since then, the pension fund has continued to engage companies consistent with its investment policies.