CalPERS Names 12 Firms not to Divest over Iran, Sudan

Investment committee research finds companies don’t meet divestment threshold

The California Public Employees’ Retirement System’s (CalPERS) investment committee has named 12 firms it says should not be considered for divestment due to possible involvement in Iran and Sudan.

According to CalPERS documents, the investment committee named seven companies that it says do not meet the threshold criteria for consideration in the California Public Divest from Iran Act. Those companies are General Electric, Honeywell, S&P Global, UK telecommunications giant BT Group, German civil engineering firm Bilfinger, French industrial gases company Linde, and Austria’s Raiffeisen Bank International. 

The California Public Divest from Iran Act prohibits the boards of CalPERS, and the California State Teachers’ Retirement System (CalSTRS), from investing in companies with specified business activities in Iran. The act requires CalPERS to identify and engage with companies that are potentially subject to the act, and divest when consistent with the investment committee’s fiduciary duties.

The committee said it received letters from all the companies confirming that they were not engaged in the business activities targeted by the act. The only exception was General Electric, which the committee said it exonerated after a review of recent SEC 10-Q filings indicated the company does not meet the threshold criteria for consideration.

The investment committee also named five companies that it said should not be considered for divestment due to possible involvement in Sudan. Existing law prohibits CalPERS and CalSTRS from investing public employee retirement funds in a company with active business operations in Sudan. The five companies are UK insurance firm Old Mutual, French natural gas distributor Engie, Swiss telecommunications operator Ascom, Dubai Islamic Bank, and Mumbai-based ICICI Bank.

The committee said it was satisfied by letters from the companies that confirmed they had no presence in Sudan. The lone exception was Dubai Islamic Bank, which told the committee in a letter that it owns a 29.5% stake in the Bank of Khartoum as a legacy investment, but that it plans to exit the position and otherwise has no business activity in the country.

“Staff has not identified any risks associated with removing the companies,” said the investment committee in an investment committee agenda item for CalPERS board meetings being held this week. “Eliminating companies that do not meet the threshold criteria for consideration under the Acts supports open and transparent communication to interested stakeholders, and allows CalPERS to focus resources on areas where questions remain open.”

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