California Agency Invests $500 Million in The Green Sector

California Agency Invests $500 Million in The Green Sector

The California Public Employees’ Retirement System (CalPERS) just invested $500 million in market-traded green energy firms, which brings the agency’s investments in clean energy stocks and funds since 2006 to $2.5 billion.

A purchasing behemoth, CalPERS manages the retirement accounts of 1.6 million public employees and their families and is valued at between a quarter and half a trillion dollars. The agency’s investment decisions can encourage large flows of capital to a specific area of the economy, and with last year’s rate of investment hitting a very high 13.3 percent, it bought a lot of cache, together with the tens of billions it generated.

But did CalPERS funnel half a billion dollars to encourage capital flows to California green stocks, or are they looking out for the best investment rate? Some observers have pointed out CalPERS questionable history of pay-to-play transactions and staff members accepting bribes from investors.

Public pension funds have been criticized in the past for projecting unrealistic growth, prompting some fund managers to engage in risky investment behavior, says Steven Greenhut of California-based Pacific Research Institute (PRI). Add to that unethical investor relations and shifting money because of political or union influence, and “what you can end up seeing is that tax payers might be responsible for CalPERS’ debt,” says Greenhut, if the money the pension fund owes to retiring employees isn’t there.

Greenhut thinks pension fund reform should be a progressive issue, even though PRI veers libertarian, because public money used to address any CalPERS shortfall reorients dollars that can be used for low-income assistance and job development programs.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.