"Can California’s Multi-Billion Pension Systems Force Campaign Finance Transparency?"
California’s employee pension plans are among the largest investors in the country. Put together, the California Public Employees Retirement System’s (“CalPERS”) and the California State Teachers’ Retirement System (“CalSTRS”) have nearly $400 billion in assets — and that adds up to hundred of billions of dollars worth of stock that can be wielded in shareholder votes to require corporations to disclose their secret corporate campaign donations. Earlier this month, California Treasurer Bill Lockyer instructed the pension plans to do just that:
State Treasurer Bill Lockyer today asked CalPERS and CalSTRS to develop formal policies supporting shareholder initiatives to require full disclosure of corporations’ political spending and oversight of such spending by companies’ boards of directors. As Treasurer, Lockyer serves on the governing boards of CalPERS and CalSTRS. CalPERS is the nation’s largest public pension fund, with $233.6 billion in total assets. CalSTRS is the nation’s largest teacher’ pension fund, with $155.4 billion in total assets.
“Studies have shown a negative link between a company’s political spending and the resulting value of the firm,” said Lockyer. “As fiduciaries, it’s our duty to ensure investors have the information they need to accurately evaluate a firm’s profitability and long-term sustainability. And shareholders should be able to count on a company’s board of directors to diligently oversee campaign spending policies and practices to make sure they serve the best interests of the company and investors.”
Shareholder initiatives intended to change a corporation’s policies are notoriously difficult to enact. Many shareholders are checked out from the process, and the amount of control shareholders can actually exert over a corporation is rather limited. Additionally, the largest investors in a corporation are often major Wall Street investment funds that could have little interest in decreasing corporations’ ability to secretly buy elections.
Nevertheless, the sheer size of California’s pension plans makes them an 800 pound gorilla — and could give them enough voting power to tip a shareholder election in favor of disclosure.