CalSTRS Board Urges Energy Companies To Review Growing Risk of Business in Iran

News release

 SACRAMENTO, CA  – California State Teachers’ Retirement System (CalSTRS) trustees today called on 13 international energy companies with which it invests to take immediate steps to assess the risks to their business operations in Iran. CalSTRS, the nation’s second-largest public pension fund, estimates it has $1.4 billion invested in these companies that have some operations in Iran.

“CalSTRS has never and will never tolerate support of terrorism,” said Dana Dillon, Teachers’ Retirement Board chair. “In the strongest words possible, we urge these businesses to consider the growing risk to their investment value by continuing their current activities.”

Today’s direction by the Teachers’ Retirement Board begins constructive engagement with the international energy companies (see list below) that have been identified by the Department of Energy and Congressional Research Service as doing business with Iran. The goal of this engagement is directed to companies with which CalSTRS is invested in order to reduce risk to the teachers’ pension fund.

The CalSTRS board members have an overriding fiduciary duty in making investment decisions. Starting in 1978, the board set policies allowing secondary, social factors to be considered if they affect the value of the investment. Those policies were refined in 2006 when CalSTRS adopted the first and most comprehensive policy of socio/geo-political risk factors of any U.S. public pension fund. The policy encourages a process of constructive engagement with those companies needing greater attention to reduce risk due to social or environmental injury.

“We know being an active shareowner works to bring about change,” said Jack Ehnes, CalSTRS chief executive officer. “We have a proven track record in successfully leveraging our ownership to move directors of selected investment holdings to greater accountability and improved value of the company.”

CalSTRS’ efforts come at a time of increased federal engagement with the Iranian government on issues of concern. The U.S. Department of State held diplomatic discussions regarding Iraq on May 28, which marked the first face-to-face meeting in 27 years.

The complex issue of divestment is pending in federal legislation, H.R. 2347, Iran Sanctions Enabling Act of 2007, which passed out of committee on May 23. This bill is permissive and would allow public pension funds and others to divest from large corporations doing business in Iran’s energy sector.

CalSTRS Holdings in International Energy Companies Identified as Doing Business in Iran as of May 31, 2007:

  • ENI
  • Gaz Capital (Gazprom)
  • Gazprom ADR
  • Indian Oil
  • Lukoil ADR
  • Norsk Hydro ADR
  • OMV
  • Petrobras
  • Repsol
  • Royal Dutch Shell
  • Statoil
  • Total

With a $171.1 billion investment portfolio, the California State Teachers’ Retirement System is the second-largest public pension fund in the United States. It provides retirement, disability and survivor benefits to California’s 800,000 public school kindergarten through community college educators and their families.

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