CFA letter to CalPERS on Tobacco Investing

Rob Feckner, President, CalPERS Board of Administration
Henry Jones, Chairman, CalPERS Investment Committee
400 Q Street
Sacramento CA 95811

May 13, 2016

Dear President Feckner and Chair Jones:

The Board of Directors of the California Faculty Association is disturbed to learn that in the course of reviewing your policies you are considering reinvestment in tobacco.

Given all that we know about tobacco and its cost to smokers’ lives in terms of chronic illness, death, addiction, and financial stability, and the cost to their families and to society, we conclude that it is ethically wrong to promote that addiction through CalPERS investments.

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.

Every year, we hear about the difficulties CalPERS encounters negotiating the cost of health insurance for CalPERS members, and even with the advantages CalPERS offers, we see our faculty and their families struggle with the ever-rising cost of insurance.

As has been well-established by medical organizations, the cost of medical care is dramatically inflated due to the use of tobacco—the only legal product we can identify that kills half of its users when used as directed.

Just this week, researchers at UC San Francisco Medical Center (see link below) issued a report on the dramatic reductions in health care expenditures in just one year from a 10 percent reduction in smoking by a population.  

Can CalPERS actually afford not to support those kind of savings to keep our public health insurance program afloat?

Furthermore, CalPERS as a pension fund lives in perpetuity, unlike like mere mortals. CalPERS, through its investments, affects future people and shapes society as a whole. Any analysis of the cost or loss of opportunity from not investing in tobacco needs to be offset against long-term future medical care costs of treating future patients, not to mention the effects on pubic health.

From both short- and long-term views, promotion of tobacco is harmful not just to individuals and to society, but to CalPERS itself.

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. It is short-sighted and wrong. We cannot address financial concerns that way.

Furthermore, it is cynical enough that the tobacco industry promotes its products overseas in ways that are not allowed here in California, and that it promotes smoking directly to children. Here at home, we see promotion of smoking to the students on the campuses where we teach. The California State University is now in a process of adopting rules that restrict that practice. 

We cannot build the stability of our own retirements on profits predicated on the addiction of our students or on other teachers’ students in another country.

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

Decide today. Do not revisit tobacco investments. 


Jennifer Eagan
President, California Faculty Association
on behalf of the CFA Board of Directors

cc: Members, CalPERS Board of Administration
Micheal Bilbray
John Chiang
Richard Costigan
Richard Gillihan
Dana Hollinger
J.J. Jelincic
Ron Lind
Priya Mathur
Bill Slaton
Teresa Taylor
Betty Yee


Smoking Behavior and Healthcare Expenditure in the United States, 1992–2009: Panel Data Estimates
UCSF study on tobacco use:
KQED news report: