Dumping oil stocks risks ‘rebellion’ by polluters, says Calstrs

(Bloomberg) — The world’s biggest polluters could engage in a ‘rebellion’ if investors sell their stocks rather than work with them in the transition to cleaner energy, according to the second-largest public pension fund. American.

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Energy transition “can’t be a fight,” Christopher Ailman, chief investment officer of the California State Teachers’ Retirement System, told a panel discussion hosted by Sacramento State University on Wednesday. . “The more of a fight we make of it, the more rebellion we’re going to see on the other side.”

His comments echo those of BlackRock Inc. CEO Larry Fink, who recently met with executives from major oil companies, including Exxon Mobil Corp. and Shell Plc, as the world’s largest asset manager seeks to navigate the interests of fossil fuels and climate activists.

Read more: Larry Fink meets Big Oil and his enemies to navigate the fight against climate change

Lawmakers in US states including West Virginia, Alaska, North Dakota and Texas have warned they could take out of business fund managers and investment banks that pressure companies on social and environmental issues.

Ailman reiterated previous comments that divestment is not the answer to getting polluters to change. Calstrs has done this six times over the past two decades – for financial rather than social reasons – and selling shares has not only cost the pension fund money, it hasn’t either changed business practices, he said.

“The sad thing that I noticed is that each time there was no change, nothing is different in the fact that we sold those stocks,” Ailman said. “Somebody else bought them, and those companies, those industries continued and behaved the same way they had in the past. Nothing, absolutely nothing, changed.

Ailman touted his fund’s success in persuading oil companies and utilities to set targets to reduce emissions.

“Divestment doesn’t reduce greenhouse gases,” he said at Wednesday’s panel discussion sponsored by the Sacramento State College of Continuing Education’s Consensus and Collaboration Program.

Calstrs, which managed $327.6 billion at the end of last year, backed activist investor Engine No. 1’s battle to replace three Exxon board members. The oil giant risks following in the path of Eastman Kodak and former video rental giant Blockbuster if it doesn’t move away from fossil fuels, Ailman said in a December Bloomberg TV interview.

Read more: Calstrs says Exxon risks being the next blockbuster

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Felix J. Dixon