Administration June 8, 2007

CalSTRS Cautions on Iran Investments

June 8, 2007 (PLANSPONSOR.com) - Even as new divestiture legislation winds its way through the California legislature, the state teacher pension fund trustees are pressing for change.
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California State Teachers’ Retirement System (CalSTRS) trustees have called on 13 international energy companies with which it invests to take immediate steps to assess the risks to their business operations in Iran. CalSTRS, the nation’s second-largest public pension fund, estimates it has $1.4 billion invested in these companies that have some operations in Iran.

“CalSTRS has never and will never tolerate support of terrorism,” said Dana Dillon, Teachers’ Retirement Board chair. “In the strongest words possible, we urge these businesses to consider the growing risk to their investment value by continuing their current activities.”

The Teachers’ Retirement Board instructed CalSTRS staff to begin constructive engagement with the international energy companies (see list below) that have been identified by the American Israel Public Affairs Committee as doing business with Iran. According to a  press release , the goal of this engagement is directed to companies with which CalSTRS is invested in order to reduce risk to the teachers’ pension fund.

Pending Legislation

In announcing the new initiative, CalSTRS cited pending federal legislation, H.R. 2347, the Iran Sanctions Enabling Act of 2007, which passed out of committee on May 23. The bill is permissive, according to CalSTRS, and would allow public pension funds and others to divest from large corporations doing business in Iran’s energy sector.   Additionally, this week The California Assembly passed a measure that would force both CalSTRS and the California Public Employees’ Retirement System (CalPERS) to divest their holdings in Iran-linked companies, pushing along legislation that has been criticized by the two funds as too sweeping (see  Calif. Assembly Gives Full Nod to Iran Divestment Bill ).

Starting in 1978, the CalSTRS board set policies allowing secondary, social factors to be considered if they affect the value of the investment – policies that were refined last year when the $171 billion fund adopted a policy that “encourages a process of constructive engagement with those companies needing greater attention to reduce risk due to social or environmental injury,” according to a press release.

CalSTRS administers retirement, disability and survivor benefits for California’s 795,000 public school educators and their families and 1,400 school districts.

International energy companies in which CalSTRS had an investment that were doing business inas of May 31, 2007:

  1. ENI
  2. Gaz Capital (Gazprom)
  3. Gazprom ADR
  4. Indian Oil
  5. INPEX
  6. Lukoil ADR
  7. Norsk Hydro ADR
  8. OMV
  9. Petrobras
  10. Repsol
  11. Royal Dutch Shell
  12. Statoil
  13. Total

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