CFA, Cancer Society say: ‘CalPERS, keep off tobacco’

CFA joined ranks with the American Cancer Society and other opponents of tobacco investing at a meeting of the CalPERS Committee on Investment on Monday, May 16.

CFA Associate Vice President-North Kevin Wehr argued on behalf of CFA’s Board of Directors that a plan to review and possibly restart CalPERS investments in tobacco companies is not a good idea.

He read from a letter by CFA President Jennifer Eagan that was delivered to the CalPERS board. Noting the ethical problem of using retirees money to own stock in tobacco companies, the letter says:

“But this action you are taking is doubly disturbing because CalPERS is not only a public institution that provides retirement benefits; it is also a public institution that provides health care benefits for large numbers of Californians, including the California State University faculty that we represent…

It would be grossly ironic for CalPERS to profit from the promotion of sickness on one hand while CalPERS and our members confront the astronomical costs of that sickness on the other…

We realize that no investment is perfect and that investing is fraught with conflicts. But some decisions are easy ones. This is an example.

Pressure to resume tobacco investing comes in part from a Wilshire consulting report that claims CalPERS has lost the opportunity to earn some $3 billion in profits by giving up tobacco. That is 1 percent of CalPERS assets (which are about $300 billion) spread over the 16 years since the 2000 decision to divest.

In a letter to CalPERS, Dr. Stanton Glantz, a cardiologist who directs the UCSF Center for Tobacco Research and Education, said Wilshire consulting also has worked for Phillip Morris, a large tobacco company, and pointed out that tobacco companies remain under court supervision under the Racketeer Influenced and Corrupt Organizations Act.

Jim Knox of the American Cancer Society, who wrote an op-ed explaining why reinvestment in tobacco is a bad idea, advised CalPERS board members that, contrary to current policy, he learned just before the meeting that the CalPERS Annual Investment Report 2015 shows the pension fund holds stock in four tobacco companies right now.

Sources explain the tobacco holdings in the CalPERS portfolio were purchased by “external” rather than “internal” investment managers.

PHOTO (left to right): Speakers against tobacco by a CalPERS poster headed “Investing for Life”: Janet Cox of Fossil Free California; Eric Knapp, CalPERS retiree; Jim Knox of the American Cancer Society; Kevin Wehr of CFA; Sandy Emerson of Fossil Free California.