By Laurence Darmiento, Staff Writer
Feb. 28, 2022 - Los Angeles Times
California legislators plan to introduce a bill that would force the state’s giant pension funds to divest any Russian assets, joining lawmakers in other states trying to squeeze the country over its war in Ukraine.
The bill, which is expected to be introduced in the next few days, would require the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, as well as all other state agencies, to divest the assets, while also asking California companies to do the same. It also would block the awarding of state contracts to companies doing business with Russia.
“The world is watching the atrocities taking place in Ukraine. It’s sickening,” Senate Majority Leader Mike McGuire, (D-Healdsburg), said in a statement. “California has unique and remarkable economic power in this circumstance. As the fifth-largest economy in the world, we must use this power for good. We can help stop this autocratic thug, Putin, by advancing this critical legislation and enacting our own financial divestments.”
The bill would contain an urgency clause that would have it take effect immediately once it is passed by the Legislature and signed by the governor.
CalPERS, which provides pension benefits to state and local government employees, currently holds no Russian government debt but has investments in publicly traded Russian companies, real estate and some private equity totaling $900 million to $1.1 billion at any given time, fund spokeswoman Megan White said.
That means its exposure to Russian assets comprises only a fraction of the fund, which is the largest public pension fund in the nation, with $485 billion under management as of June 30.
“CalPERS supports the people of Ukraine who are suffering due to what is an unjustified and unprovoked attack,” Chief Executive Marcie Frost said in a statement “CalPERS investments in Russia total less than 1% of our total portfolio. We are monitoring current events and will take action as appropriate to protect the interests of our members.”
CalSTRS, which provides pension benefits to teachers and is the nation’s second-largest public pension fund, had investments in Russia worth less than $500 million as of Feb. 23, fund spokesman Bill Ainsworth said. Since then, the value has dropped due to the volatility in the market and repositioning of the portfolio.
“Therefore the actual exposure number could be much lower. CalSTRS is a long-term investor and we are continuing to actively manage our positions,” he said in an emailed statement.
Although the figures provided did not break down the fund’s investments, a public database on its website shows it held almost $32 million in Russian government debt as well as about $1.5 million in Russian rubles as of June 30. The database also shows that at the time it held shares in companies such as Gazprom and Russian banks Sberbank and VTB ・both sanctioned by the U.S ・valued at roughly $800 穃illion. With the fund totaling $319.8 billion as of Jan. 31, any current holdings would amount to less than 1% of CalSTRS assets.
The proposed bill is supported by a bipartisan coalition of state senators and assembly members, according to McGuire’s office.
Gov. Gavin Newsom typically does not comment on proposed or pending legislation, but in response to the announcement his office issued a statement saying, “California stands against the unprovoked aggression against the people of Ukraine, and we continue to evaluate potential actions or policies related to the developing circumstances.”
California joins other states taking steps to divest Russian assets or pressure Putin over the war.
Georgia House Speaker David Ralston, a Republican, got a bipartisan standing ovation Monday when he told representatives he would seek to have the state’s retirement funds quickly divest any Russian assets.
“I don’t know about y’all, but I don’t want one penny of Georgians’ money going to subsidize Vladimir Putin,” Ralston said. “While our role in international affairs is limited, we make clear we stand with those who want to live in peace.”
On Monday, the Indiana House passed legislation that would block Russian-controlled businesses and nonprofits from acquiring property in Indiana for one year. It now goes to the Senate.
And New York Gov. Kathy Hochul signed an executive order Sunday forbidding her state from doing business with Russia. She ordered state agencies to divest money and assets from companies or institutions aiding Russia in its war against Ukraine. The Democratic governor also said New York would welcome Ukrainian refugees, noting that New York already is home to the largest Ukrainian population in the U.S.
“We strongly condemn the action of Putin and Russia for this unprovoked attack, which is now leading to atrocities against innocent human beings,” she said.
Other states taking action included Pennsylvania, Connecticut, New Jersey, Virginia and North Dakota.
California Assemblyman Chad Mayes (I-Rancho Mirage) said he would push to have the state’s legislation expanded to include such local funds as the Los Angeles County Employees Retirement Assn. if the bill doesn’t initially include it.
“We have to send a very clear message that the aggression that was shown by Putin and Russia towards the Ukranian people is unacceptable,” he said.
The Associated Press contributed to this report.