California Pensions Could Be Mandated to Divest from Turkish Assets over WWI Atrocities

Legislation condemning Turkey for its failure to recognize the Armenian Genocide would result in California divestments.

The California state legislature has passed an act intended to mandate that California public pension funds divest from assets affiliated with Turkey over the government’s failure to officially acknowledge its responsibility for the Armenian Genocide, a century-old atrocity that claimed the lives of approximately 1.5 million Armenians.

Assembly Bill 1320 would bar the California Public Employees’ Retirement System (CalPERS) and California State Teachers’ Retirement System (CalSTRS)—the two largest pension plans in the US—from making additional investments “in any investment vehicle that is issued, owned, controlled, or managed by the government of Turkey,” until January 2025, or until Turkey officially acknowledges its responsibility. The bill also mandates the pensions’ full liquidation of such investments within 18 months of the bill’s passage.

CalPERS expressed its opposition to the bill in a memo presented to the pension’s board of trustees, stating that any loss in investment income or fees related to divestiture would have to be reimbursed through employee and employer contributions.

“Every dollar in investment returns that is forgone, or expended on transaction costs and fees, must be offset by employer and employee contributions,” fund staff wrote in a memo. “If CalPERS were to divest from Turkish investment vehicles and the companies performed well, employers and employees would bear the investment loss and transaction costs to maintain divestment through increased contribution rates.”

The Los Angeles Times reported in March that thousands of people marched through the city dressed in all-black attire and waving the colors of the Armenian flag ”to demand that the century-old killings of 1.5 million Armenians officially be recognized as a genocide.”

“There can be no reconciliation if it’s not recognized as a genocide,” said Vilen Khachatryan, a member of the United Young Armenians group. “We march today to tell the world, ‘Never again.’”

This is not the first time that California leveraged basic human right violations to ban investments from a particular country. The state has acted against Iran for counts related to international terrorism, South Africa for its apartheid policy, and Sudan for the Darfur genocide. The state has also mandated widespread bans against gun manufacturers, thermal coal companies, and companies that have relatively weak environmental, social, and governance (ESG) policies.

CalPERS’s divestment policy states “while CalPERS wants companies in which it invests to meet high corporate governance, ethical, and social conduct standards, an investment in a

company does not signify that CalPERS approves of the company’s policies, products, or actions.”

CalPERS also stated that “there is considerable evidence that divesting is an ineffective strategy for achieving social or political goals. This is because the usual consequence is often a transfer of ownership of divested assets from one investor to another.” By foregoing its ownership in a company, it loses its influence through shareholder activism, CalPERS argued.

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