California lawmakers, who last year ordered state pension funds to drop investments in Sudan, are in the forefront of a nationwide movement toward “terror-free” investing.
Under legislation now before the state assembly, the California Public Employees’ Retirement System (CALPERS, the nation’s largest pension fund) and the state teachers’ fund both would be banned from investing in companies that do business in Iran, Bloomberg News reports. That would mean divesting of shares in companies including BNP Paribas of France and Siemens AG of Germany – and of any mutual funds that invest in them.
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Other states, including Texas, Maryland and New Jersay, also are moving to ban investments in nations the U.S. State Department says sponsors terrorism. Similar legislation has been proposed in Congress.
But critics call the effort misguided and say it would hurt small investors. “We’re going to destroy our relations with the very countries we need in a united front against Iran,” said William Reinsch, who as president of the National Foreign Trade Council represents 300 multinational corporations. A court challenge by the council last month succeeded in overturning a similar Illinois law targeting companies that do business in Sudan.
“The real losers would be a bunch of retired policemen and firefighters,” because pensions would have to sell high-performing international funds, Reinsch said.
