Investigation triggers congressional probe into massive public pension ESG losses
(The Center Square) – The U.S.House Committee on Education and Workforce launched an inquiry into California’s main public pension fund after The Center Square exposed that it may have prioritized ESG goals at the expense of its fiduciary duty.
A committee letter, which placed the investigation in the context of its ongoing inquiry into stronger safeguards for public pensions nationwide, cited The Center Square’s investigation into CalPERS’ loss of 71% of the $468 million it invested in its Clean Energy and Technology Fund as the impetus for its action.
“CalPERS as a public pension is eligible for significant tax subsidies if, among other things, its benefits are provided ‘for the exclusive benefit of [an employer’s] employees or their beneficiaries.’” wrote the committee. “The Committee seeks information to determine whether CalPERS is undermining this requirement by prioritizing a radical Environmental, Social, and Governance (ESG) agenda over its obligation to its beneficiaries, which will inform its potential reforms to ERISA and the Code.”
Under current regulations, public pension funds receive significant tax benefits, including tax-free growth, tax deferrals, and some tax exemptions, in exchange for operating for the exclusive benefit of pensioners.
The committee’s letter to CalPERS President and Vice Chair of Investment Theresa Taylor demanded extensive documentation of its CETF investments and due diligence, which The Center Square was denied due to explicit exemptions in California’s Public Records Act for certain financial records.
CalPERS must provide the requested documentation by Feb. 27.
“We received and are reviewing the U.S. House Committee letter regarding the nearly 20-year-old investment,” wrote CalPERS spokesperson Abram Arredondo in a statement to The Center Square. “As their investigation is ongoing, we have nothing further to add.”
The letter’s three congressional signatories, U.S. Rep. Tim Walberg, R-Mich., Rick Allen (R-Ga.), and Kevin Kiley (R-Calif.), were not available for comment by publication time.
This story originally appeared in The Center Square.