The board warned that sweeping investment bans could hurt investment returns and cost the fund money, the Sacramento Bee reported. Anne Sheehan, board representative for state finance director Michael Genest, told the newspaper a broad Iran investment ban could wreak havoc in the fund’s $163.5 billion portfolio. “We’re talking about Coca-Cola, Microsoft. It is amazing what we would have to divest.”
While CalSTRS previously backed legislation calling for divestment of Sudan-linked investments (See CalSTRS Supports Sudan Divestment Bill ), two measures introduced this year calling for California’s large public pension funds to shed holdings in investments linked to Iran and terrorist states would force the systems to sell off billions of dollars in investments. CalSTRS chief investment officer Christopher J. Ailman, noting that most of the system’s portfolio is held in multinational corporations, said in the news report it would be “impossible to find alternative investments.”
Activist groups often turn to CalSTRS and the California Public Employees Retirement System (CalPERS) to make a stand against certain companies or countries, as they are the nation’s largest and most influential public retirement systems. The Bee noted that the funds have only agreed to divest in rare instances – to protest apartheid in South Africa and make a stand against smoking. Both funds supported divestment of Sudan-linked investments (See CalPERS Votes to Bar Sudan-related Investments).
As for the two measures currently in the legislature, CalSTRS plans to oppose the bills unless they are amended to include the fund’s legal and investment standards.