Investing Public Pensions in Fossil Fuel and AI Companies Is More Than Amoral – It’s Bad Business

Public pension money should be directed to where it will do the most good

Liz Perlman and Stephen Lerner for Common Dreams

We're not this guy

Our country faces an affordability crisis amidst fundamental attacks on democracy. Public employee pension plans can either be part of the solution or part of the problem.

Late last year, New York City Comptroller Brad Lander recommended the city’s pension boards drop BlackRock and other portfolio managers that don’t have decarbonization plans up to the city’s standards. Lander’s initiative was blocked, and the editorial board of The Washington Post accused him of playing politics. But Lander argued that his recommendation was in line with the government’s fiduciary duty to protect the long-term value of pension funds, the retirement systems most public sector workers rely on—and have been paying into their entire careers. He’s right. 

In this critical moment in history, companies that are actively hastening climate change, threatening housing security, eliminating jobs and industries, and destabilizing our democracy and economy do not deserve our investment. Yes, they are acting immorally but they are also very bad investments with little promise of future returns for public sector workers. It’s not “playing politics” to refuse to fund their efforts to dismantle our society. That’s why we’re calling on pension boards across the country to take a hard look at their portfolios and make the smart business decision: stop investing in companies like this today.

The stakes could not be higher: pension funds account for $6.1 trillion in state and local defined-benefit funds alone. Every month, nearly 15 million workers across the country contribute part of their paycheck to ensure they have enough income to retire securely. This is a big pot of money and the companies that boards choose to invest it with matter. 

For public sector workers, pensions are not only retirement funds, but deferred current compensation. Workers are forsaking their hard-earned money today for the potential of a dignified future. Meanwhile, corporations are using that money today to further their own goals—many of which are directly at odds with the goals, livelihoods, and futures of public employees.

EDITOR'S DISCLOSURE: Steve Lerner and I go back 40 years when he was a young textile worker organizer. Steve was a frequent house guest at our suburban DC home. On one of his visits, Cathy and I (well, mostly Cathy) introduced him to Marilyn Sniederman. I told Cathy I wouldn't recognize her skills as a yenta until the bris of their first son. When that happened, I admitted my mistake. Later on, when I went to work in the labor movement, I worked with both Marilyn and Steve in my first union job. I owe them both.  - Will Collette

Public pension systems across the country, including the California State Teachers’ Retirement System (CalSTERS), California Public Employees’ Retirement System (CalPERS) and New York City retirement funds, are heavily invested in Blackstone, the private equity company turning profits by hiking up rents during a housing affordability crisis. RealPage, the company sued last year by the DOJ for allegedly operating a nationwide rental price-fixing scheme, has investments from over a dozen pension funds through private equity funds. Public workers are watching their deferred compensation funnel into corporate exploitation while they fight to pay their own rent or mortgages.

Palantir, the data surveillance software company whose co-founder has stated his support for public hangings and apartheid, has multi-million dollar investments from The Teacher Retirement System of Texas, the Ohio Public Employees Retirement System, CalPERS, CalSTERS and other pension funds. Palantir’s tools have been used by the military to conduct destabilizing wars around the world, by DOGE to gather and merge data on millions of US residents, endangering the safety and security of us all, and by ICE to terrorize individuals and families across the country— threatening our democracy at home and abroad.

The interests of public workers and these companies dangerously diverge, but even the one area of alignment is fraught: secure return on investment. We are almost undeniably in the midst of an AI bubble, much larger than the dot com bubble that came before. With so many pension fund portfolios overly concentrated in the tech industry, funding new data centers built on speculative calculations and crypto companies propped up by hype—Palantir, Coinbase, VC firms like Andreessen Horowitz and others, NVIDIA and many more—a shift in the global appetite for new technology could empty the pockets of millions of workers. 

Short-term gains are not a good predictor of long-term returns for investors like public employees, who are stuck with the terms of their retirement funds and can’t pull out when markets turn. When the editorial board of the Washington Post writes that “the job of pension fund managers is to maximize returns for retirees who depend on them,” they should take these very real—and apolitical—risks into account.

Public pension funds are an enormous engine driving the economy today, and the investment choices that pension boards make are critical to the future of the country and the world. When boards invest workers’ money, they contribute to the specific visions and plans of companies and the people who run them. And when those plans include the destruction of our environment, our right to housing and fair work, and our democracy, it’s assisted suicide. 

Today we are urging pension boards to think beyond short-term gains and market bubbles. We’re calling on leaders to speak out and push for change as Former Comptroller Brad Lander did. Public worker retirement money must be invested responsibly in a secure future for us all.

Liz Perlman is the executive director of AFSCME 3299, the University of California’s first employee union — representing more than 40,000 Service workers (SX), Patient Care Technical workers (EX), Skilled Craft workers (K7), and more at UC’s 10 campuses, 5 medical centers, numerous clinics, research laboratories, and UC Hastings College of Law.

Stephen Lerner is a fellow at Georgetown University's Kalmanovitz Initiative for Labor and the Working Poor and is one of the architects of the Justice for Janitors Campaign.