On Monday, CalPERS announced it may consider reinvesting in the tobacco stocks it sold off more than a decade ago. Certain individuals, however, are looking at the plan as a bad prospective.
According to ABC News, the California Public Employees Retirement System investment committee has decided to look into the tobacco divestment issue over the next two years and decide when 2018 comes. Although the discussion was narrowly rejected, the committee will still continue the current tobacco policy.
Health groups, industry shareholders and institutional investors, including a number of CalPERS' beneficiaries across California, are now placing their attention on CalPERS' move to review the tobacco divestment deal. This is because according to the Department of Health and Human Services, tobacco is the leading preventable cause of death in the country.
In 2015, the Wilshire Associates reported that the pension funds of CalPERS' beneficiaries who went against the tobacco industry has been reduced. Other divested assets of CalPERS which include Iran, Sudan, and other certain firearm companies had very little impact on the pension portfolios of CalPERS' beneficiaries. The tobacco industry, on the other hand, has decreased an estimated $2 billion to $3 billion on CalPERS' pension fund.
The majority of beneficiaries, however, are considering to study and consider the broader financial and economic effect of reinvesting in the tobacco industry again. The board members, on the other hand, have reassured its members and beneficiaries that there is no clear plan on reinvesting its $293 billion assets back in tobacco; although the study will be a part of its fiduciary duty as per Reuters.
Nonetheless, according to Bill Slaton, one of the board members, no one should place any interest in reinvesting in tobacco. As reported by the Sacramento Bee, the CalPERS' plan has already come under fire from those who say that reinvesting will violate its social responsibility as well as its role in providing health insurance to its 1.6 million members.
The possibility of reinvesting in the tobacco industry will be studied by CalPERS for 12-24 months before it will make any clear and decisive decisions on the said matter.
