7513.76.
(a) The Legislature finds and declares all of the following:(1) The combustion of coal, oil, and natural gas, known as fossil fuels, is the single largest contributor to global climate change.
(2) Climate change affects all parts of the California economy and environment, and the Legislature has adopted numerous laws to mitigate greenhouse gas emissions and to adapt to a changing climate.
(3) 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.
(4) The production of fossil fuels and the effects of climate change resulting from the use of fossil fuels all lead to disproportionate adverse impacts on low-income communities and communities of color.
(5) A transition away from fossil fuels to clean energy will create greater employment, support the economy, and improve public health.
(6) The purpose of this section is to require the Public Employees’ Retirement System and the State Teachers’ Retirement System, consistent
with, and not in violation of, their fiduciary responsibilities, to divest their holdings of fossil fuel company investments as one part of the state’s broader efforts to decarbonize the California economy and to transition to clean, pollution-free energy resources.
(b) As used in this section, the following definitions shall apply:
(1) “Board” means the Board of Administration of the Public Employees’ Retirement System or the Teachers’ Retirement Board of the State Teachers’ Retirement System, as applicable.
(2) “Company” means a sole proprietorship,
organization, association, corporation, partnership, venture, or other entity, or its subsidiary or affiliate, that exists for profitmaking purposes or to otherwise secure economic advantage.
(3) “Investment” means the purchase, ownership, or control of
publicly issued stock, corporate bonds, or other debt instruments issued by a company. “Investments” also includes purchase, ownership, or control of mutual funds and exchange-traded funds, unless the board is satisfied on reasonable grounds that a mutual fund or exchange-traded fund is unlikely to have in excess of 2 percent of its assets, averaged annually, directly or indirectly invested in fossil fuel companies.
(4) “Public employee retirement funds” means the Public Employees’ Retirement Fund described in Section 20062 of this code, and the Teachers’ Retirement Fund described in Section 22167 of the Education Code.
(5) “Fossil fuel” means petroleum oil, natural gas, and thermal coal. Thermal coal is coal
used to generate electricity, such as that which is burned to create steam to run turbines. Thermal coal does not mean metallurgical coal or coking coal used to produce steel.
(6) “Fossil fuel company” means one of the 200 largest publicly traded fossil fuel companies, as established by carbon content in the companies’ proven oil, gas, and coal reserves.
(c) The board shall not make additional or new investments or renew existing investments of public employee retirement funds in a fossil fuel company.
(d) (1) The board shall liquidate investments in a fossil fuel company on or before July 1, 2031.
(2) Notwithstanding paragraph (1), this subdivision shall be suspended upon a good faith determination by the board that an act of God, war, or other unforeseeable event creates conditions that materially impact normal market mechanisms for pricing assets and shall only be reinstated upon a subsequent good faith finding of the board that market conditions have substantially returned to normal ex-ante. Upon such a finding, the board shall have six months to liquidate any remaining investments in a fossil fuel company.
(3) Paragraph (2) shall remain in effect only until January 1, 2035, and as of that date is inoperative.
(e) (1) Commencing February
1, 2025, and annually on February 1 thereafter, the board shall create a report that includes the following:
(A) A list of fossil fuel companies of which the board has liquidated its investments pursuant to subdivision (d).
(B) A list of fossil fuel companies with which the board still has not liquidated its investments.
(C) A list of fossil fuel companies of which the board has not liquidated its investments as a result of a determination made pursuant to subdivision (f) that a sale or transfer of investments is inconsistent with the fiduciary responsibilities of the board as described in Section 17 of Article XVI of the California Constitution
and the board’s findings adopted in support of that determination.
(D) An analysis of methods and opportunities to rapidly and effectively reduce dependence on fossil fuels and transition to alternative energy sources in a realistic timeframe that avoids negatively contributing to economic conditions particularly damaging to public employee retirement funds and to overall net employment earnings of the state’s workforce.
(2) The board shall submit the report to the Legislature, in compliance with Section 9795, and to the Governor, and shall post the report on the board’s internet website.
(f) Nothing in this section shall require a board to
take action as described in this section unless the board determines in good faith that the action described in this section is consistent with the fiduciary responsibilities of the board described in Section 17 of Article XVI of the California Constitution.