A growing number of large institutional investors are putting ethical strings on their investments. California State Teachers’ Retirement System’s (CalSTRS) is one of such organization. CALSTRS has prohibited investments in a number of areas, including firms that manufacture firearms that are banned from sale in the state of California.
CalSTRS announced on Monday June 8th that it has accepted a proposal from Cerberus permitting CalSTRS to exit its interests in Remington Outdoor. This completes a two-year effort from CalSTRS to divest from most firms related to the manufacturing of firearms.
Chief Executive Officer Jack Ehnes noted: “Consent to monetize our exposure to Remington Outdoor completes our decision to divest from banned firearm manufacturers. All along we have sought a transaction that balances the best financial interests of the more than 879,000 educators we serve, while holding consistent with the values of our membership.”
He continued to say: “In April of 2013 the Teachers’ Retirement Board committed to divest from companies that manufacture firearms illegal for sale in California. Within months of the decision to divest, CalSTRS eliminated $3 million in public equity stocks from Smith & Wesson and Sturm Ruger. Prior to that, CalSTRS’ private equity partner, Cerberus, publicized its intent to sell holdings of Remington Outdoor, formerly Freedom Group.
“In the more-than two years since our decision to divest, we have exhausted every effort to urge Cerberus to sell, or to unilaterally sell our indirect interest in Remington Outdoor. However, as a limited partner in a private equity investment pool controlled by Cerberus, CalSTRS possesses very limited rights.
“CalSTRS includes provisions in new private equity agreements that exclude firearms subject to divestment and offer an opt-out option if such investments occur.”
More on CalSTRS
CalSTRS has portfolio valued at around $193.1 billion as of April 30, 2015, and is the largest global educator-only pension fund. The fund administers a hybrid retirement system, including traditional defined benefit, cash balance and voluntary defined contribution plans. Moreover, CalSTRS provides disability and survivor benefits to family members of pension holders.
CalSTRS invests for the 879,000 public school educators and their families in California’s 1,700 school districts, county education offices and community college districts.