Liability Risk of Fossil Fuel Investments

Letter by Park Guthrie.

Dear CalSTRS Board Members,

Please ensure that CalSTRS staff do due diligence analyzing the growing risk that climate liability lawsuits present to fossil fuel investments. I suspect that CalSTRS staff have discounted such a risk.

Four factors make climate liability lawsuits an increasing risk to the value of fossil fuel investments.

1. Attribution Science:

Attribution science is rapidly improving. This means that financial harm due to climate-related disasters can be more closely linked directly to production of greenhouse gasses. This exposes fossil fuel companies to greater liability increasing the risk to our fossil fuel investments.

2. Evidence of Fossil Fuel Industry Fraud/Disinformation Campaign:

More evidence of a decades-long misinformation campaign by the fossil fuel industry is emerging. For example, here is a brand new study revealing the accuracy of Exxon Mobil's climate change projections dating back to the 1970's and 1980's. As it becomes more and more clear that fossil fuel companies intentionally misled the public and regulatory agencies about the risk of fossil fuels, it is more likely that climate liability lawsuits will decrease the value of fossil fuel investments.

3. Growing Number of Climate Liability Lawsuits:

There are growing numbers of climate liability lawsuits. According to a September, 2021 news article in the science journal Nature, there are more than 1,800 climate lawsuits across the world and the number has risen dramatically since 2015.

4. Changing Generational Norms Related to the Climate Crisis:

While many climate lawsuits have not yet been successful, there is a significant generational divide related to the climate crisis and the fossil fuel industry. Any reasonable assessment of the financial risk to fossil fuel investments from climate lawsuits should take into account the fact that within five or ten years, current Gen Z and Millenials will make up a much higher percentage of potential jurors and judges involved such climate liability lawsuits. Gen Z and Millenial norms and attitudes about the climate crisis and the fossil fuel industry differ significantly from older generations (Gen X, Baby Boomers, Silent Generation). Past failure of climate liability lawsuits does not predict future failure, especially since the least climate concerned generations will be aging out of juries and judgeships to be replaced by more climate concerned cohorts.

As fiduciaries, CalSTRS staff and board have a duty to carefully analyze this risk to our fossil fuel investments. Please ensure CalSTRS staff accurately assesses the risks to fossil fuel investments and transparently communicates these risks to stakeholders.

Thanks so much for all your important work!

Sincerely,

Park Guthrie

6th Grade Teacher and CalSTRS Member

CTA State Council Representative