CalPERS Snuffs Out Tobacco

October 16, 2000 ( - The investment committee of the $177 billion California Public Employees Retirement System (CalPERS) decided not to decide on the selection of international equity managers, but narrowly voted to eliminate tobacco holdings.

CalPERS board voted to defer a decision on active international equity managers, instead determining that the board itself should interview 15 non-US core international managers and two Japan-only managers.

That decision followed a protest by state Controller and board member Kathleen Connell over the lack of inclusion of incumbent international core manager ValueQuest/TA among the staff-recommended finalists. 

She also expressed concerns that there were no women- or minority-owned managers among the list of finalists.

Other members also raised concerns that the staff was dropping Asia (ex-Japan) and Japan-only mandates in favor of Pacific Basin mandates. In response the board added Japan-only managers Scudder Kemper and Nomura to the list of candidates to be interviewed, according to P&I.

The investment committee of the nation’s largest pension fund voted 7-5 to divest its $560 million in tobacco stocks, roughly 0.4% of their total portfolio. There was one abstention on the vote, which followed four hours of testimony. 

The decision had been postponed from last month’s meeting while staffers gathered additional information on the impact of the divestment.

The California State Teachers Retirement System decided last June to drop the majority of its tobacco stocks from its investment portfolio, shedding some $237 million in holdings.