Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
California lawmakers and officials in three cities want to divest from companies that help build President Donald Trump’s proposed 30-foot-high wall on the U.S. border with Mexico.
A bill lawmakers announced March 20 would require the California Public Employees’ Retirement System and California State Teachers’ Retirement System to divest pension fund holdings in companies that win contracts with U.S. Customs and Border Protection involving the wall.
The two systems are the largest pension systems in the country and are valued at a combined $514 billion. It is unclear how much of their holdings could fall under the bill.
The legislation ( A.B. 946) will be amended in the next week to be called the Resist the Wall Act and can be considered in committee in April. Assembly members Phil Ting (D), Lorena Gonzalez Fletcher (D) and Eduardo Garcia (D) announced the bill three days after the federal government invited vendors to submit proposals for the border wall Trump has pledged to build.
“We don’t want to spend a single cent building a wall that the people of California don’t support,” Ting told Bloomberg BNA March 20.
Both pension systems would have 12 months to liquidate investments in companies that win contracts or subcontracts related to the wall under the Resist the Wall Act.
The bill states that California’s diversity is a “great source of innovation and industry, making California one of the largest economies in the world and an economic engine for the United States.” It also states that Trump made “prejudiced assertions” during his presidential campaign, including “calling Mexicans rapists and ‘bad hombres.’”
In Berkeley, the city council approved a resolution March 14 denouncing Trump’s plan for the wall and recommending that the city extract itself from business with companies involved in its construction. Berkeley will “to the best of its ability divest from any companies involved in the construction of the wall,” but the resolution doesn’t specify that divestment includes its employee pension funds.
Oakland and San Francisco are considering measures that would ban city contracts with companies involved in building the wall.
Oakland’s resolution, up for a vote of the city council March 21, also calls on CalPERS to divest from companies involved in the project and urges other U.S. cities and counties to adopt similar policies.
CalPERS administers pension benefits for Berkeley and Oakland employees.
San Francisco supervisors will announce plans March 21 for a city law banning border wall contractors from bidding on San Francisco construction projects.
San Francisco Supervisor Hillary Ronen (D) pointed to T.Y. Lin International, which was the lead design engineering firm on the San Francisco Bay Bridge east span project and has added itself to the Department of Homeland Security’s list of vendors that may bid on the border wall.
“We’re asking companies like T.Y. Lin International to continue building bridges, not walls,” Ronen said in a statement March 20.
CalSTRS spokesman Ricardo Duran said in an emailed statement that the system is analyzing the bill and hasn’t taken a position yet.
“If passed, CalSTRS will implement the provisions of the legislation after considering its potential impact on the fund and balancing this impact against CalSTRS’ fiduciary responsibility to its members,” Duran said.
A CalPERS spokeswoman told Bloomberg BNA in a March 20 email system officials haven’t seen the bill yet and can’t comment on it but that generally, CalPERS believes divestment is harmful to its long-term sustainability.
Under its global governance principles, CalPERS prefers “constructive engagement” to divesting as a way to affect the conduct of the entities in which it invests.
“This is because investors that divest lose their ability as shareowners to positively influence the company’s strategy and governance,” the CalPERS principals state.
California lawmakers have a long history of pushing CalPERS and CalSTRS to divest from specific industries for policy reasons. Most recently, in 2015 the Legislature enacted a measure requiring CalPERS and CalSTRS to divest from coal companies by July 1, 2017.
To contact the reporter on this story: Laura Mahoney in Sacramento, Calif. at LMahoney@bna.com
To contact the editor responsible for this story: Jo-el J. Meyer at email@example.com
The Resist the Wall Act is available at http://src.bna.com/m9Y.
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)