From: Rhea Varley
To: Beth Redfern
Subject: FW: Divestment from CalPERS is illegal
Date: Monday, September 15, 2025 8:03:59 AM
Attachments: CalPERS_Divestment_Israel_Detailed.pdf
From: Deborah Kallick <
Sent: Saturday, September 13, 2025 12:42 PM
To: Alex Stillman <[email protected]>; Meredith Matthews <[email protected]>; Sarah Schaefer <[email protected]>; Stacy Atkins-Salazar <[email protected]>; Kimberley White <[email protected]>; Rhea Varley <[email protected]>
Subject: Divestment from CalPERS is illegal
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To the City Council,
We understand that you are going forward with a divestment strategy.
I am not an attorney but I do know that this is illegal. Please consult the city attorney for verification.
Kind regards,
Deborah Kallick
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Deborah A Kallick, PhD
CalPERS and Divestment from Israel: Detailed
Overview
1. CalPERS Is Bound by Fiduciary Duty
• CalPERS serves nearly 2 million California public employees, retirees, and their families. • Its fiduciary duty under California law is to maximize returns and minimize risk—not to make political statements.
• The California Constitution (Article XVI, Section 17) requires CalPERS to prioritize the fund’s financial health above other considerations.
2. Precedent on Divestment Campaigns
• South Africa (1980s–90s) is one of the few successful divestment campaigns, under heavy state and national pressure.
• Other examples include Sudan, Iran, Tobacco, Firearms, and Fossil Fuels. • In each case, divestment only occurred when California state law mandated it through legislation. • CalPERS has otherwise resisted divestment, citing harm to diversification and returns.
3. Israel-Specific Legal Protections
• California passed AB 2844 (2016), prohibiting the state—including CalPERS—from contracting with companies that boycott Israel.
• This law effectively protects CalPERS’ ability to invest in Israel and restricts divestment campaigns targeting Israel.
• Absent a dramatic change in state law, CalPERS is legally restricted from divesting from Israel.
4. Practical Path for Activists
• Community pressure on CalPERS itself has limited effect because its Board must follow fiduciary law first.
• The real lever is state legislation: campaigns must lobby Sacramento (Governor + State Assembly + Senate).
• Even if a law is passed, the Board must ensure any divestment aligns with fiduciary duty. They have rejected past proposals (e.g., fossil fuels) on financial grounds.
5. What It Means for Communities
• Organizing to force CalPERS divestment from Israel would be a steep uphill battle. • California state law currently protects CalPERS’ investments in Israel. • Such campaigns are often more symbolic—signaling opposition—than financially effective.
Bottom Line
For CalPERS to divest from Israel, California state law would have to change. At present, laws like AB 2844 explicitly protect investments in Israel and prohibit boycott-based divestment. That makes successful divestment campaigns extremely unlikely.