Bonds News

Calstrs board votes to divest from four coal companies

SAN FRANCISCO, Feb 3 (Reuters) - The California State Teachers’ Retirement System’s (Calstrs) board on Wednesday voted to liquidate its holding in four U.S. thermal coal companies after the state passed a law last year urging them to do so.

Coal companies make up only about $40 million of the fund’s $186 billion portfolio, but lawmakers in Sacramento targeted those investments on the basis that burning coal significantly contributes to global climate change.

The four companies impacted by the decision are Cloud Peak Energy, Hallador Energy Company, Peabody Energy Corporation, and Westmoreland Coal Company, Calstrs said.

The U.S. coal industry is suffering from a glut of cheap natural gas, coal’s primary competitor for power generation, and oil. Weak demand helped push coal producer Arch Coal Inc into bankruptcy last month.

The law included language saying that the Calstrs and the California Public Employees’ Retirement System (Calpers) did not have to divest from coal if doing so would violate its “fiduciary duty” to members.

“We determined that given the financial state of the industry, the movement of the regulatory landscape and coal’s impact on the environment, its presence reflects a loss of value,” said Sharon Hendricks, chair of the investment committee.

The fund will now determine whether to divest from non-U.S. coal companies, she said. (Reporting by Rory Carroll)