Due to recent gun violence in the U.S., the California State Teachers’ Retirement System (CalSTRS) Investment Committee made a socially responsible investment decision to divest “from firearms companies that manufacture weapons that are illegal in California.”
“I think we’ve taken appropriate action, given the unspeakable and tragic loss of life that occurred in Connecticut last month,” said investment committee chair Harry Keiley, referring to the shooting at Sandy Hook Elementary School that resulted in the death of 26 people. “This latest incident…is a tipping point for CalSTRS and speaks to the correctness of our actions. This is not only the right thing to do but positions us to deal with the financial pressures we anticipate this sector of the industry will face.”
Recently, CalSTRS board member and California State Treasurer Bill Lockyer called for the pension fund to divest from companies that manufacture firearms that are illegal for sale or possession in the state of California.
“Divestment in such firms would comply with CalSTRS’ existing investment policy and comport with the board’s fiduciary duty to members and beneficiaries,” Lockyer wrote in a letter to Keiley. Lockyer’s letter noted that assault weapons clearly fall into the category of being a product “detrimental to public health and safety.”
The fund is currently invested in Smith & Wesson and Sturm, Ruger & Co. through index funds, with a total investment of $2.9 million.
CalSTRS, a $154.3-billion fund, is the first public fund in the U.S. to divest in gun manufacturers. But this isn’t the first time the pension fund has made socially based investment decisions. In 2009, CalSTRS divested from the tobacco industry.
CalSTRS, with a portfolio valued at $154.3 billion as of Nov. 30, 2012, is the largest educator-only pension fund in the world. CalSTRS administers a hybrid retirement system, consisting of traditional DB, cash balance and voluntary DC plans, as well as disability and survivor benefits. For 100 years, CalSTRS has served California’s public school educators and their families, who today number 856,000 from the state’s 1,600 school districts, county offices of education and community college districts.
* With files from Pensions & Investments.