There's an interesting bit of history to look to. Four years ago, a bill requiring the California Public Employees' Retirement System and the state's teachers' retirement system to divest their tobacco investments passed the California State Senate but did not ultimately clear the state assembly. The employees' pension fund, colloquially known as Calpers, is a massive $163.5 billion (U.S.) juggernaut that, like the CPP, pays benefits based on actuarial projections of death and mortality. Like the CPP, Calpers must look prudently to a long-term investment horizon.
Calpers bills itself as a catalyst for so-called sound corporate governance, and in fact has been a leader in asserting that shareowners, and not just management and corporate boards, play a big role in the governance of corporations. But its fiduciary responsibility, again like the CPP, is to maximize returns.
Advocates of the California bill, much like the position of the Canadian Medical Association and its supporters today, argued that public pension funds should not be investing in tobacco companies at the same time as the state was investing hundreds of millions of dollars annually to treat people with smoking-related illnesses. The bill died in September, 2000.
A month later Calpers announced that it was getting out of tobacco anyway, citing the legal assault on big tobacco — action that, said the fund, "could substantially reduce our shareholder value in tobacco." Today, says a Calpers representative, the fund has a "tobacco-free portfolio."
As does the state's teacher fund.
Calpers finessed the situation in just such a way as to avoid the "slippery slope" John MacNaughton fears. Could MacNaughton have finessed the CPP situation differently?
As it stands, his open letter seems churlish, remarking that "[s]everal political and opinion leaders promptly lent their support [to the CMA], publicly chiding the CPP Investment Board for its tobacco investments."
Perhaps if MacNaughton were to hear the louder voices of regular folk on Oct. 7 he might be pressed to seek out a more conciliatory response.
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Jennifer Wells' column appears Saturday in the Life section and Sunday in the A section. E-mail her at jwells@thestar.ca.
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