CalSTRS Moves Forward to Engage Firearms Makers and Retailers
Corporate governance efforts to begin, aimed at a public engagement strategy with potential divestment as a final resort.
WEST SACRAMENTO, Calif. (May 9, 2018) – The California State Teachers’ Retirement System today unveiled a plan to prioritize engagement with makers and retailers of firearms that are illegal in California. The plan, approved unanimously by the Teachers’ Retirement Board, authorizes CalSTRS corporate governance staff to make firearms engagement activities a top priority by publicly engaging companies and potentially recommending that the board consider divestment if engagement efforts fail.
“We’re taking steps to protect the CalSTRS portfolio while expressing empathy for the heinous gun-related tragedies.”
Chair of the Investment Committee
“Unlike other CalSTRS engagements, where our staff practices quiet diplomacy, this plan advances a more public approach, to leverage the public pressure that has been mounting in this country in response to recent tragic gun violence such as the school shootings in Parkland, Florida in February and Las Vegas in November,” said Harry Keiley, Chair of the Investment Committee. “As trusted fiduciaries for California’s more than 933,000 educators, the Teachers’ Retirement Board is dedicated to securing our members’ financial future during their retirement years. We’re taking steps to protect the CalSTRS portfolio, avoid reputational risk and increase the long-term value of the companies in which we invest, while also expressing sensitivity and empathy for the heinous gun-related tragedies that have impacted our country over the last several years. We encourage other institutional investors to consider conducting similar activities.”
The plan does the following: revises the 2018 Corporate Governance Engagement Plan to prioritize engagement with companies that manufacture and sell guns illegal in California; requires a public engagement strategy; authorizes additional staff resources to carry out the engagement; and directs staff to report back to the Investment Committee on its progress. In accordance with CalSTRS Divestment Policy, should engagement efforts prove unsuccessful, the board may consider divestment or customized indices that would exclude retailers who sell bump stocks or firearms illegal in the state of California.
CalSTRS has been one of the nation’s first and most vocal pension funds on the issue of gun violence. Following the Sandy Hook Elementary School tragedy in December 2012, the CalSTRS Investment Committee directed staff to begin the divestment process with the two publicly traded U.S. companies within the CalSTRS portfolio that manufacture weapons illegal in California. In April of 2013, the Teachers’ Retirement Board authorized divestment from Sturm Ruger and Smith and Wesson. In June 2015, CalSTRS exited an interest in Remington Outdoors, which was part of a private equity investment with Cerberus. And in February of this year, CalSTRS liquidated its investments in Vista Outdoor because the company added a line of firearms that violate the CalSTRS policy.
The California State Teachers’ Retirement System, with a portfolio valued at $222.5 billion as of March 31, 2018, is the largest educator-only pension fund in the world. CalSTRS serves California’s more than 933,000 public school educators and their families, from the state’s 1,700 school districts, county offices of education and community college districts. A hybrid retirement system, CalSTRS administers a combined traditional defined benefit, cash balance and voluntary defined contribution plan. CalSTRS also provides disability and survivor benefits. CalSTRS members retire on average after more than 25 years of service, with a median retirement age of 62.9, and a monthly pension of approximately $4,475, which is not eligible for Social Security participation. For more data, download the CalSTRS Fast Facts 2017 brochure.
See how CalSTRS demonstrates its strong commitment to long-term corporate sustainability principles in its annual Global Reporting Initiative sustainability report: Global Stewardship at Work.