Everyone, including pension fund managers, must dump their
holdings in the bedeviled industry.
By
Stanford, Georgetown, and other universities are stripping coal stocks and bonds out of their endowments. Why? For starters, they don’t want to lose money.
At least 200 U.S. coal-fired power plants have stopped operating since 2010,
shrinking the total fleet by 40 percent. The pricesteelmakers pay for coal has withered, sinking by two-thirds
over the past four years.
“Let’s face it,” says analyst Travis Hoium of the plainspoken Motley Fool
investment hub. “Coal is dead.”
Shares in Peabody Energy and
Arch Coal, two of the industry’s only companies that still trade on the stock
market, have plummeted by about 85 percent so far this year andstopped paying dividends.
Most of their competitors went bankrupt or were delisted because their shares
were selling for pennies.
Oil and gas holdings are also inflicting losses on
investors these days, but many university endowments aren’t ready to swear off
those fossil fuels for good. The coal industry’s bleak prospects make investing
in it unquestionably harmful to your life savings, as well as the climate.
Clearly, coal divestment makes
sense for everyone apart from moral and environmental concerns. Could someone
please explain this to pension fund managers?
Take TIAA-CREF, a firm that
manages retirement funds for 5 million people — mostly teachers and professors.
It still had $838 million in assets tied to major coal companies as of late
April, The Guardian reported.
There are another 25 pension
funds serving public-sector workers and retirees across our nation that hadn’t
dumped their coal holdings by mid-spring either, according to the British-based
newspaper. California Public Employees’ Retirement System, known as CalPERS,
topped that list, with $300 million in coal holdings, followed by the Teacher
Retirement System of Texas, with $105 million.
State lawmakers are moving toward barring CalPERS and
the California State Teachers’ Retirement System, known as CalSTRS, from
holding any investments in companies that derive half or more of revenue from
coal mining. In June, California’s state senate passed the measure, which had
already cleared a key state assembly committee.
Why bother with this legislative
hassle? Because the pension funds have declined to divest,
despite the abysmal performance of the industry’s stocks and bonds — and ample
pressure in a state that’s working hard to cut climate pollution.
“Coal is going the way of the
dinosaur, dial-up Internet, and VHS tapes,” California state senator and
president pro tempore Kevin De Leon wrote in an Orange County Registerop-ed
explaining why he wants to protect retirees from this dying industry’s fallout.
“It is rapidly becoming outmoded.”
Perhaps you don’t personally
know any of the nation’s 68,400 remaining coal miners — a fast-shrinking demographic sorely
lacking retirement security. But
you probably do know at least one current or former teacher whose pension is
being undermined by coal exposure.
Despite its poor financial
health, burning coal remains a big business that generates about one-third of
our power. After years of surging, natural gas briefly bypassed
coal in April, becoming the national grid’s top energy source.
And something more promising
than a cloud of fracked gas is rising from coal’s ashes.Renewable energy powered more than
two-thirds of the 3.9
gigawatts of generating capacity that came online in the United States over the
first half of 2015.
This emerging greener grid
doesn’t just tread more gently on the Earth. Investing in it yields robust returns at a time
when fossil-fuel assets are increasingly toxic. Most shares in solar and wind companies are outperforming the overall stock
market.
That’s just one good reason why
anyone managing a pension fund or university endowment should consider
investing in renewable energy.
Columnist Emily
Schwartz Greco is the managing editor of OtherWords, a non-profit national
editorial service run by the Institute for
Policy Studies. OtherWords.org.