private iniquity

California Teachers’ Pension Votes to Shun Gun Money

CalSTRS CIO Christopher Ailman

A few weeks ago, in the wake of the Sandy Hook shooting, California teacher pension fund CalSTRS succeeded in exerting enough moral suasion on Cerberus Capital Management, one of the private equity firms that invests its members’ money, to get the firm to agree to sell the Freedom Group, a firearms manufacturer that makes the Bushmaster rifle that was used in the shootings.

Yesterday, CalSTRS’ board voted unanimously to divest from all of its gun holdings, or at least any firms that invest in types of guns and ammunition that are illegal in California, such as assault weapons and “high-capacity magazines,” according to Fortune’s Dan Primack. The new rule will apply to both direct investments — in gun stocks such as Smith & Wesson — as well as indirect investments through private equity firms and hedge funds that have firearms holdings.

According to Capitol Weekly, CalSTRS actually should have scrapped its Cerberus investment years ago, since investing in a gunmaker represented a breach of the pension fund’s environmental, social, and governance (ESG) policy. But it didn’t get to it, because it was too focused on “human rights” and “risk and liquidity as the financial crisis erupted.”

Now CalSTRS will presumably have to comb through the rest of its investments, looking for firms that have firearms stakes. If it needs more hands on deck, it can always call “Mr. Private Undercover Equity,” who should be free to help.

California Teachers’ Pension Shuns Gun Money