Fossil Fuel Investments

Big Oil Still a Goliath in the Golden State

Posted by CLR

A game-changing bill to hold fossil fuel giants accountable for climate damage stalled in the Legislature this summer, apparently blocked largely by oil interests like WSPA (Western States Petroleum Association).

Senate Bill 1497, known as the Polluters Pay Climate Cost Recovery Act, aimed to make companies pay their fair share for the havoc wreaked by their products.  Right now, fossil fuel companies rake in the profits from the burning of coal, oil and methane gas. Big oil is making record profits. One 2023 report suggested about $172,813,000,000 in profits in one year alone.  At the same time, Big Oil has been accused of gouging consumers at the pump and contributing the damage from global warming in California related to rising sea levels, rampaging wildfires, floods, and deadly heat waves.  Californians are suffering.  Wildfires alone cost the state about $20 billion in 2020, for instance. Governor Newsom said he’d be holding Big Oil accountable.

Despite these promises, SB 1497 failed to make it to a floor vote by May 24, a critical deadline this term. Big Oil continues to profit, and California residents remain stuck with the check.

Climate Transparency in California Is at Risk

Posted by CLR

The Climate Accountability Package — comprised of Senator Scott Wiener’s SB 253 and Senator Henry Stern’s SB 261 — created the nation’s first requirements for large corporations to publicly disclose their greenhouse gas emissions, carbon embedded in supply chains, and climate risks. The New York Times called SB 253 in particular a “landmark climate disclosure bill” […] with national repercussions.”  

The ink on these bills is barely dry and they are already under attack from multiple fronts.

Governor Newsom’s proposed budget included significant cuts to address a $37.9 billion budget shortfall, including all funding to new legislative programs.  Thus, the $9 million requested by the California Air Resources Control Board (CARB) to implement the Climate Accountability Package was part of that proposed cut.  The Newsom Administration has emphasized that the proposed budget was just a starting point for negotiations.  Senator Wiener, author of SB 253, has issued the following statement:  “It’s critical that the May budget include funding to implement these laws so that businesses have the certainty they need to prepare to make these new disclosures.”  Thus, funding to implement these laws is far from certain.

Although having the laws have the support of many major corporations, including  Apple, Google, Salesforce, Levi’s, and Patagonia, the California Chamber of Commerce was stanchly opposed. In fact, it file suit in federal district court to challenge the laws on January 30, 2024.  The petition, drafted by the firm multinational law firm Gibson, Dunn & Crutcher, LLP, raises claims largely rooted in the US constitution. 

  • The petition argues that the laws impermissibly “compels speech” under the First Amendment by making the corporations report on their direct and indirect emissions, which they argue are primarily speculation, as well as requiring them to report on the future risks from climate change.  Further, they complain that some of this reporting is on the company’s website.  Many of the complaints are based on “vagueness” in the law; since both laws require CARB to adopt regulations to implement them, these charges seem premature. 
  • The petition argues that federal law in the United States Constitution and in the Clean Air Act preempts any efforts to require companies to report their emissions related to activities inside and outside of California.   Implicit in this argument is that “reporting” on emissions is “regulation” on emissions.
  • The petition argues that the laws somehow attempt to regulate commerce extraterritorially, both interstate and foreign, which is—according to the petition—an “offense” to the commerce clause. 

All of these arguments are clearly aimed at the activist, conservative United States Supreme Court.

Senator Wiener issued the following statement in response:

“The U.S. Chamber of Commerce’s lawsuit against these groundbreaking climate laws is straight up climate denial,” said Senator Wiener. “Why is the Chamber of Commerce working so aggressively to block basic transparency for the public? We know the answer. It’s not because of the Chamber’s bogus arguments about cost and implementation, since it’s both inexpensive and easy for corporations to make these disclosures. It’s not because of the Chamber’s bizarre and frivolous First Amendment argument. Rather, the Chamber is taking this extremist legal action because many large corporations — particularly fossil fuel corporations and large banks — are absolutely terrified that if they have to tell the public how dramatically they’re fueling climate change, they’ll no longer be able to mislead the public and investors. The Chamber and large corporate polluters don’t want the public to know how much they’re strangling the planet with carbon emissions — that’s why they filed this baseless lawsuit.

“The climate crisis is a real and present threat to our planet and to businesses’ success. Investors and consumers have a right to know the details of how billion dollar companies are navigating the greatest challenge of our time, and many major corporations like Apple and Google are already making these disclosures and support these laws because they understand that need. While corporate lobby groups continue to wage an unhinged misinformation campaign against these laws, investors and consumers are being deprived of vital information to navigate our rapidly warming planet.”

See more from Senator Weiner on the need to fund these measures at Four questions for Scott Wiener.

SB 252 Fails as CalPERS and CalSTRS Oppose Its Proposal for Divestment from Fossil Fuels

Posted by CLR

The Legislature proposal in SB 252 this year would have required the California Public Employees’ Retirement System (CalPERS) and the State Teachers’ Retirement System (CalSTRS) to stop investing in fossil fuels as of January 1, 2024, and to sell their remaining fossil fuel investments by the 2030, if consistent with their fiduciary duty. (The Legislature is allowed by the California Constitution prohibit certain investments by these retirement boards, where it is in the public interest to do so, provided that the prohibition satisfies the standards of fiduciary care and loyalty owed by the boards to pension plan participants. (Cal. Const., art. XVI, § 17.) ) The bill would also require annual reporting on fossil fuel holdings.

The bill noted that the combustion of coal, oil, and natural gas, known as fossil fuels, is the single largest contributor to global climate change, and that fossil fuel companies’ plans to expand production, public relations campaigns, and efforts to obstruct climate stabilization policies are incompatible with California’s climate goals, and our obligation to current and future generations. The idea behind the bill is that, to meet our zero carbon goals, money needs to move from funding fossil fuel infrastructure and instead be invested at scale in clean energy. CalPERS has investments of $9.4 billion currently in fossil fuels.

The bill was blocked by the chair of the Assembly Committee on Public Employment and Retirement–Senator Lena Gonzalez (D-Long Beach).  CalPERS specifically expressed strong opposition to the bill. In its message to the public, expressed both on its website and in mailers sent to public employees, presumably in the thousands, CalPERS noted that divestment would not be consistent with its fiduciary duty. The logic there is circular in as much as the condition for divestment under SB 252 is that divestment be consistent with the fiduciary duty.

In point of fact, CalPERS appears to have a divestment policy to oppose all calls for divestment that are not “investment related.” CalPERS opposes the potential lost investment performance and the transaction costs associated with divestment. It’s divestment policy states that its fiduciary obligations require it to oppose this and all other divestment initiatives by the Legislature: “However, fiduciary obligations generally preclude CalPERS from sacrificing investment performance for the purpose of achieving goals that do not directly relate to CalPERS’ operations or benefits.”

CalPERS also may have been opposed to the limits on future investments as well as the requirement to report on the scale of its investments in fossil fuels on a regular basis.

The proposal is up for reconsideration next year.