CalSTRS Delays Decision on Tobacco Investments

Source from:  By Jon Ortiz - jortiz@sacbee.com Wednesday, June 4, 2008 06/05/2008

Trustees of the state's mammoth teachers retirement pension fund decided this afternoon to postpone until September a decision on whether to allow tobacco back into its stock portfolio. Board members of the California State Teachers' Retirement System quizzed the fund's attorney, chief investment office and consultant about whether an 8-year-old policy that has kept it from tobacco investments is now outdated and violates the trustees' duty to act in a way that financially benefits the fund's 822,000 teachers, retirees and their families. State Treasurer Bill Lockyer said he opposes changing the fund's policy. "Now is not the time for STRS to invest in U.S. Big Tobacco," Lockyer said in a statement released by his office about 30 minutes before CalSTRS' investment committee convened to take up the matter. "In fact, now is the time for STRS to examine whether to divest its holding in international companies and completely withdraw from the tobacco business." Several board members asked for more information and questioned whether tobacco's future is secure enough to merit investment. The issue was clouded by an admission by CalSTRS staff that it couldn't find objective advice on the legal risks that tobacco companies face, especially in emerging markets outside the United States. After about 90 minutes of discussion, the board asked CalSTRS staff to work up a list of policy options by its September meeting. "Let's see ... how can we cut the baby in half," committee chairman Roger Kozberg said as he searched for a motion to end the discussion. CalSTRS and the California Public Employees' Retirement System divested themselves of tobacco stocks in 2000. Changes in the industry have prompted some CalSTRS leaders to question whether the tobacco industry is now secure enough to merit investment. The fund estimates it would have up to $1 billion more had it held on to tobacco stocks over the last eight years. Enditem