The boards at the California Public Employees’ Retirement System and the California State Teachers’ Retirement System are facing campaigns from groups that want them to pull money out of companies associated with the Trump administration, scale back investments in fossil fuels and break with private equity firms over their labor records.

The list includes electric car maker Tesla, surveillance company Palantir, private companies that operate immigrant detention centers, ExxonMobil, Chevron and private equity firm Apollo Global Management.

To some extent, divestment campaigns are routine business at CalPERS and CalSTRS, which hold assets worth a combined $1 trillion and are headquartered in the capital of a deep blue state. 

But the combination of Trump-era politics and a concerted push by labor in the Legislature to force the pension funds to open the books on private equity holdings is attracting the focus of a more diverse mix of advocates.

“It’s politics,” said Richard Costigan, a Republican who served on the CalPERS board from 2011 to 2019 as an appointee of Democratic Gov. Jerry Brown. “When you look at Palantir and Tesla, it’s driven by politics. Seriously, why would you not invest in Palantir?”

The rebuttal: Despite their earnings and stock value today, the companies affiliated with the Trump administration’s immigration enforcement program are taking on serious reputational risk that could backfire on the funds. Separately, they say putting money into fossil fuel companies poses hazards both for the environment and for pension systems banking on long-term investments.

The pension funds “should be aligning their investments with the values of their state, the values of their members, and the long-term interests of their members,” said Richard Brooks, the climate finance program director at the advocacy organization Stand.Earth.

He recently released a study tallying CalPERS and CalSTRS investments in companies that participate in the Trump administration immigration sweeps, such as Palantir and private prison companies CoreCivic and GeoGroup. 

“I see a disconnect right now,” he said.  

Staff at CalPERS and CalSTRS oppose divestment and they consistently fight legislation that would tie their hands. Both systems are underfunded and owe tens of billions more than their assets, a crisis that in 2012 led the Legislature and then-Gov. Jerry Brown to pass a law mandating less generous pension benefits for employees hired after that year. 

But CalPERS and CalSTRS have pulled money out of industries in the past. CalPERS divested from firearms in 2013 and from tobacco in 2016. They’re also barred by state law from investing in coal as well as in businesses connected to Iran.

They’re governed by boards of directors that are made up of public employee union leaders, appointees of state Democratic leaders and the state controller and state treasurer, both of whom are Democrats. 

In short, they’re people who are aligned politically with the mostly liberal groups that are pressing them to change policies. 

That doesn’t mean it’s an easy call for them to withdraw investments from any industry.

“It’s so tricky. How do you divest from all of that is anti-union? The quick answer is you can’t,” said Kenny Waggoner of Ducenta Squared Asset Management, who advises union benefit plans.

He gave an example of a real estate investment trust with stakes in large warehouses — the kind operated by Amazon. Members might question an investment in a company with a reputation for fighting unionization, but the rent from the warehouse might be the best return available to support their pensions.

Here’s a look at the main friction points before CalPERS and CalSTRS.

Tesla volatility

A long–running campaign to persuade CalPERS to break with electric car maker Tesla peaked in September when the pension board commissioned a risk assessment on whether it should own stock in the electric car maker.

Tesla delivered returns for CalPERS over time. It’s considered one of the “magnificent seven” tech stocks that drive markets today.  

The company’s critics characterize it as a volatile risk under Trump ally Elon Musk, pointing to Tesla’s drop in sales last year along with regulatory challenges it’s facing with its self-driving cars. CalPERS as a Tesla shareholder has consistently voted against Musk’s pay packages.

“Tesla’s past gains don’t erase the present picture,” CalPERS board Mulissa Willette said at the meeting where she requested the risk analysis. 

In March, the board held a closed-door discussion on “owning Tesla”. Afterward, a board member said in open session that CalPERS would not sell off its holdings in the company. 

“While we are unable to provide specifics regarding the discussion, we can note that the company has been one of the top 10 drivers of performance in our global equity portfolio and is a key holding for our climate transition portfolio,” CalPERS board member Kevin Palkki said. “After our closed session discussion, we collectively agreed to make no changes at this time.” 

Immigration and surveillance

Palantir, a California company that supported the U.S. military during the wars in Iraq and Afghanistan, became a focus of public pension divestment campaigns during Israel’s assault on Gaza because of its work with the Israeli Ministry of Defense. The Berkeley Unified School District, for example, in September passed a resolution calling on CalSTRS to divest from the company. 

Now Palantir is facing more scrutiny because of its work with the Department of Homeland Security, which is carrying out the Trump administration’s immigration crackdown.

The climate advocacy organization Stand.Earth called attention to CalPERS’ and CalSTRS’ holdings in Palantir and six other companies working with Homeland Security in a study it published last month highlighting public pension investments in companies that Stand.Earth described as enabling “repression and violence”.

Fossil fuels

California lawmakers were close to forcing CalPERS and CalSTRS to divest from fossil fuels three years ago when a bill to do that passed the state Senate. But it didn’t become law.

Both of the big pension funds opposed the bill, although one of their board members, state Treasurer Fiona Ma, supported it.

Advocates and public employees who don’t want their pensions to support industries that drive climate change have pressed the funds to divest from oil and gas for a decade. 

California’s third largest public pension fund, the University of California Retirement Plan, divested from fossil fuels in 2020. At the time, its leaders cited financial reasons, finding that fossil fuels have a poor long-term outlook.

The UC Retirement Plan is in better shape than CalPERS and CalSTRS. The UC plan’s assets are worth 92% of what it owes over time to its beneficiaries, while CalPERS’ and CalSTRS’ portfolios are worth about 80% of what they owe.

Labor’s attention on private equity

Two bills in the Legislature this spring pit unions against unions in questions over how CalPERS and CalSTRS should do business. 

One would compel the funds to release more information about their private equity holdings, a change that CalPERS staff contends would so severely undermine its ability to invest with those firms that it would have to increase its charges to employers by more than $6.1 billion a year. 

The measure by Democratic Sen. Dave Cortese of San Jose has support from unions that represent grocery store workers and hotel employees, none of whom have pensions in CalPERS or CalSTRS. Public sectors have not yet taken a stand on the proposal  

The second one, carried by Democratic Assemblymember Robert Garcia, would direct the funds to commission a study on their labor standards for construction and development projects. The State Building and Construction Trades Council has urged CalPERS and CalSTRS to heighten their existing labor standards and is supporting the bill.

The California School Employees Association, whose members have CalPERS pensions, is on the record opposing the trades’ bill. 

“CSEA’s position is that investment and divestment decisions regarding CalPERS funds should be made by the CalPERS Board and its investment professionals, not by the Legislature,” Aaron Latham, the union’s spokesperson, said in a written statement. 

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WASHINGTON (AP) — The White House on Tuesday is launching a website to map and track tens of thousands of infrastructure projects and private manufacturing investments, an effort by the administration to show the positive impact of its policies on the U.S. economy to a skeptical public.

The site, Invest.gov, documents roughly 32,000 infrastructure projects and more than $470 billion worth of investments in the production of electric vehicles, batteries, computer chips, biotech, clean energy and other sectors. President Joe Biden is seeking reelection in 2024 by trying to show how his policies are reshaping the U.S. economy to address climate change and compete with rivals such as China.

The president promoted the new website during a meeting Tuesday with his Cabinet, as part of a larger effort to keep public attention on a string of legislative wins during Biden’s first two years, when Democrats controlled both the House and Senate. Following $1.9 trillion in pandemic relief, Biden signed a $1 trillion bipartisan infrastructure bill into law. He also secured more than $250 billion to invest in computer chip production and scientific research and created new tax incentives for renewable energy sources that are worth hundreds of billions of dollars.

“You can go down to every city, town, anywhere on the map and find out exactly how much we’ve invested so far, what the investment is for and how it’s going to affect your community,” Biden said of the new website during the meeting in the Cabinet Room at the White House.

Natalie Quillian, deputy White House chief of staff, said the site shows that Biden’s agenda is “underway and working.”

“We want people to be able to see what’s happening in their communities,” Quillian said.

U.S. adults have generally given Biden poor reviews on his economic leadership. Just 33% approve of how the president has handled the economy, according to a May survey by The Associated Press-NORC Center for Public Affairs Research. High inflation coming out of the pandemic has eroded confidence in Biden’s economic stewardship, overshadowing the 3.7% unemployment rate and more than 13 million jobs added during his presidency.

The rollout of the site comes shortly before the administration engages in additional public outreach with a second round of its “Investing in America” tour. It plans to send out Cabinet secretaries and other officials around the country as part of the two-week July 4 congressional recess. Biden and other top administration officials previously visited parts of the U.S. in March and April in hopes of putting more focus on their policies.

“ ‘Investing in America’ is more than just a slogan,” Biden said Tuesday. “For the first time, America is actually investing in itself, beginning to pay off.”

On the website, users on the site can look at a national map or scroll through projects by state. The site documents private investments of more than $100 million that the administration said its policies helped to spur. It also provides additional economic data and details at the state level, including on how administration policies have increased access to health care coverage and lowered prescription drug prices.

—

Associated Press writer Seung Min Kim contributed to this report.

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By Giles Bruce

In the summer 2016, I was talking to Kate Long, the mentor for my Center for Health Journalism fellowship project, about why so many babies in Indiana didn’t survive past their first birthdays.

“What about pollution?” Long asked me.

I hadn’t seriously considered the environment as a cause for my then-home state’s high infant mortality rate. Public health officials in Indiana often pointed to other reasons: a lack of prenatal care, too much smoking among pregnant women, not enough breastfeeding.

That week, we toured a lead-contaminated East Los Angeles neighborhood and heard harrowing stories from community members fearful about what the toxin was doing to their bodies. Dr. Bruce Lanphear, a health sciences professor at Simon Fraser University in British Columbia, then walked us through the overwhelming science showing that lead exposure harms our health. Throughout my project, Lanphear sent me studies showing that exposure to lead and other toxic chemicals is particularly dangerous for fetuses and babies.

The $1.2 trillion U.S. infrastructure bill includes billions of dollars to replace the nation’s estimated 6 to 10 million lead water service lines. It amounts to the largest investment in water infrastructure in the nation’s history. But is it enough to clean up our water and make significant improvements in public health? I asked Lanphear.

“If there was a way for Biden and subsequent presidents to keep up this kind of investment in infrastructure, certainly that would have a positive impact not only on reductions in lead exposure but hopefully diminish the polarization that we’re seeing in politics,” Lanphear said.

“One of the challenges, of course, is that these investments and infrastructure are coming after decades of no investments, certainly no sizable investments. And so this really should be just seen as the first big installment of what should come next.”

In the months and years to come, journalists will want to follow how this money is spent in their coverage areas, whether the cleanups are done safely, and whether the investments ultimately boost public health in the United States. Now is a good time for reporters to assess existing water quality and contamination in their communities. 

Of the $55 billion allocated to water infrastructure, $15 billion is to replace lead pipes, and $10 billion will go to clearing contamination from per- and polyfluoroalkyl substances, or PFAS, chemicals used to produce things like Teflon, waterproof clothing and firefighting foam.

Being exposed to lead is an inevitable part of living in an industrial society. “Even though we can take some comfort that blood (lead) levels have declined by over 95% since the peak in the 1970s, our blood levels today are still 10 to 100 times higher than our preindustrial ancestors,” Lanphear said.

Twenty percent of Americans’ intake comes from lead service lines. The federal government banned them in the 1980s but they still deliver water to an estimated 7% of U.S. households and 400,000 schools and day care facilities. Many are in older cities and neighborhoods that are more likely to house communities of color.

Lead, Lanphear noted, has been linked to premature births and low-birth weights, lower IQs and attention deficit hyperactivity disorder in children, and coronary artery disease in adults.

Lanphear said he hopes municipalities that replace lead pipes protect residents in the meantime, by providing water filters to use before, during and shortly after the restoration and, ideally, by testing the tap water. People should also be aware that lead can get trapped in faucet aerators, so they may need to be cleaned or replaced.

“If we’re not careful, we can inadvertently increase the exposures that children and pregnant women and families have during the replacement,” Lanphear said. He pointed to the city of Pittsburgh’s approach as one that could be emulated elsewhere.

PFAS, another widely prevalent group of chemicals in water, soil air and fish across the nation, have been linked to fertility problems in women, developmental delays in children, and an increased risk of certain cancers.

Lanphear was involved in research showing that prenatal exposure to PFAS raised the risk of children developing ADHD and becoming obese. It also hindered breastfeeding. The studies looked at Cincinnati residents exposed to the toxins, which were thought to have originated at a chemical plant about 250 miles downriver.

The Environmental Working Group has an interactive map on PFAS contamination. Other PFAS data sources include the Environmental Protection Agency, the National Institute of Environmental Health Sciences, the PFAS-Tox Database, and the Green Science Policy Institute’s PFAS Data Hub. CalMatters did an exposé about the extent of California’s PFAS problem.

For lead, EWG has a tap water contaminant database, the Centers for Disease Control and Prevention has a state-level blood lead surveillance system, and the U.S. Census Bureau has information on housing with lead risk. In 2016, Vox created an interactive lead exposure risk map of the United States, while Reuters published a report on places where lead poisoning was worse than Flint, Michigan. 

Lanphear said the new legislation doesn’t address every issue affecting the country’s water supply. More than 43 million Americans rely on private wells that can contain arsenic, manganese and fluoride, chemicals that may diminish IQ scores, affect birth weight and cause bone fractures in adults, among other health problems.

Five years ago, the advice from Long and Lanphear helped change the course of my infant mortality reporting project. I detailed how not only lead but also air pollution were likely factors in the high rates of birth complications and sick babies in Indiana.

Lanphear told me a smarter strategy than spending money to ameliorate environmental disasters — not to mention the health and social costs associated with them — would be to better regulate new chemicals in the first place.

“Industry contributes very little to these cleanups to fixing the problem,” he said. “And yet the lead industry went around the cities around the country promoting these things, convincing, if not bribing, local political leaders to require lead service lines in their municipal bylaws, despite the fact that we knew [the consequences] for centuries. 

“Part of the reason the Roman Empire declined was because of widespread lead poisoning, oftentimes used in lead pipes to transport water. The real long-term issue is how do we start regulating these chemical industries so that we’re still not cleaning up their mess in 50 years?”

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