Moving to support the Ukrainian people and protect the interests of Californians, Gov. Gavin Newsom on Tuesday sent a letter to the leaders of the California Public Employees’ Retirement System, California State Teachers’ Retirement System and the University of California retirement system calling for the state to leverage its sizable global investment portfolio to sanction the Russian government.

“Russia’s brazen and lawless military assault on Ukraine demands our support for the Ukrainian people and exacting an immediate and severe cost upon the Russian government,” the Governor wrote. “The California Constitution is explicit in the fiduciary duties that are required of us on behalf of the hundreds of thousands of Californians who have invested in these systems. These fiduciary obligations and our moral imperative before these atrocities demand that you act to address Russia’s aggressions and immediately restrict Russian access to California’s capital and investments.”

The combined assets of the California Public Employees’ Retirement System, or CalPERS, California State Teachers’ Retirement System, or CalSTRS, and the UC retirement system amount to $970 billion — equivalent to 60% of Russia’s gross domestic product last year.

Over $1.5 billion of these California investments are held in various financial instruments linked to Russia’s financial markets.

The governor called for the funds to halt the flow of money from the state to Russia, ban the purchase of Russian debt and conduct an assessment to ensure their actions protect the interests of current and future retirees.

Newsom also requested recommendations from CalPERS, CalSTRS and the UC on additional measures that can be implemented to protect the state’s investments amid global financial sanctions on Russia.

The text of the letter is published below.


February 28, 2022

Theresa Taylor Cecilia Estolano
Chair, CalPERS Chair, University of California Regents
400 Q St. 1111 Franklin St.,12th Floor
Sacramento, CA 95811 Oakland, CA 94607

Harry Keiley
Chair, CalSTRS
100 Waterfront Pl.
West Sacramento, CA 95605

Dear Chairs:

Russia’s brazen and lawless military assault on Ukraine demands our support for the Ukrainian people and exacting an immediate and severe cost upon the Russian government in response to its continuing aggression. California has a unique and powerful position of influence given the state’s substantial global investment portfolio.

Alone, our Public Employees’ Retirement System holds roughly $480 billion in assets. In addition, our Teachers’ Retirement System holds $320 billion in assets, and the University of California’s Retirement System another $170 billion. This combined amount, $970 billion, is equivalent to 60 percent of Russia’s entire gross domestic product last year.

Of these California investments, over $1.5 billion are held in a variety of financial instruments — including stock of multinational corporations, private equity and real asset investments, and debt — that have some nexus or relation to Russia’s financial markets.

The California Constitution is explicit in the fiduciary duties that are required of us on behalf of the hundreds of thousands of Californians who have invested in these systems. These fiduciary obligations and our moral imperative before these atrocities demand that you act to address Russia’s aggressions and immediately restrict Russian access to California’s capital and investments. Given heightened financial risks, no fund shall purchase Russian debt and no money shall flow from the state of California to Russia. Furthermore, the funds should immediately assess risk to the retirees of our state and ensure that the actions you take protect the interests of your current and future retirees.

In addition to taking these actions, I would appreciate your recommendations of any additional safeguards that can be put in place to protect California’s investments as the U.S. and the world continue to implement financial sanctions on Russia. Please advise me of the steps that you are taking in this effort within 10 days.

I stand ready to work with you to further this important effort.

Sincerely,
Gavin Newsom
Governor of California