The California Pension Chief Fighting Fossil Fuel Divestment
The head investment officer of California’s teachers’ pension fund has fought efforts to divest the fund from fossil fuels — while personally trading more than $1 million in oil- and gas-related stocks.
For over a decade, climate activists have urged the giant California teachers’ pension fund to divest from fossil fuels. Scott Chan, the fund’s chief investment officer, has vocally opposed these efforts while personally benefiting from fossil fuel stocks. (Justin Sullivan / Getty Images)
The top investment officer of the nation’s largest teachers’ pension fund actively dissuaded state workers from divesting from underperforming and ecologically devastating fossil fuel investments — then went on to buy and sell more than $1 million in oil and gas stocks, state records obtained by the Lever show.
Scott Chan, the chief investment officer for the one-million-member, $390 billion California State Teachers’ Retirement System (CalSTRS), began trading fossil fuel stocks in 2023 — the year after he told the teachers that divesting from the sector could potentially result in a $20 billion loss for the fund.
CalSTRS, and the larger state workers’ pension fund, often acts as a bellwether for other state pension funds. If the teachers’ fund had divested from fossil fuels, it could have signaled that the sector is not a reliable investment — and affected the stocks Chan subsequently invested in.
It’s why critics accuse Chan of prioritizing his own self-interest over workers’ retirement or the environment. In addition to fueling climate change, fossil fuel stocks have been found to routinely underperform other sectors — so much so that a 2023 study found that CalSTRS divesting from the energy sector could have resulted in more money for its members.
Chan’s stock trading is “disappointing to say the least,” said Deborah Silvey, a retired community college instructor and cofounder of Fossil Free California, a group of California pension fund members pushing both CalSTRS and the larger California Public Employees’ Retirement System to divest from fossil fuel companies.
“We’ve been working on [divestment] for over a decade, and what we’ve seen is, climate chaos is more real than ever,” Silvey told the Lever. “We need to put our money where it should go and not in climate-damaging fuels.”
But Chan isn’t the only CalSTRS employee trading fossil fuel stocks.
At least sixteen other CalSTRS employees also have fossil fuel company holdings, including three members of the pension’s fourteen-member senior leadership, according to a Lever analysis. In all, the sixteen pension employees hold nearly $6 million in fossil fuel corporations and industry-adjacent companies, such as pipeline machinery suppliers and utility companies that use fossil fuels.
Chan and his colleagues’ fossil fuel investments are a “real conflict of interest,” said Richard Brooks, climate finance director at environmental nonprofit Stand.earth. Brooks added that perhaps “[Chan is] looking at his own pocketbook a little too much and not paying attention to the job that he has — which is to manage this significant amount of money in a responsible fashion.”
In response to a request for comment, a CalSTRS representative noted that its employees have adhered to ethical standards.
“At CalSTRS, we are committed to robust ethical standards and adhere to state, federal, and foreign securities laws and regulations regarding conflicts of interest and insider trading,” Thomas Lawrence, CalSTRS’s media relations manager, wrote in an email to the Lever:
Our personal trading guidelines are consistent with industry best practices, and all CalSTRS employees are required to perform their work in good faith and in the best interests of CalSTRS and its members: California’s public educators. Divesting from specific stocks, sectors, or industries does not align with our fiduciary obligations, nor does it achieve the goals divestment proponents hope to attain.
Billions for Fossil Fuels While California Burns
These revelations came as a wildfire was burning across Ventura County in Southern California, prompting evacuation orders for more than 30,000 people on May 18. According to the state’s Air Resources Board, which develops programs to fight global warming, fossil fuel–linked climate change has contributed to the frequency and intensity of the California wildfires, 1,500 of which have burned more than 40,000 acres so far this year.
In 2022, the California teachers’ pension fund and the 2.4-million-member California Public Employees’ Retirement System, the nation’s largest state workers’ pension fund with more than $500 billion in assets, were the largest fossil fuel investors among US pension funds, collectively dumping more than $43 billion into the sector. Since then, more than 2.3 million acres have burned in wildfires across the state — including the deadly Palisades and Eaton fires that ravaged parts of Los Angeles in January 2025, killing at least thirty-one people and destroying more than 16,200 structures.
For more than a decade, climate activists have urged CalSTRS and the larger state workers’ pension fund to divest from fossil fuels. In 2023, the activists almost secured a win with a piece of legislation that would have required the pension funds to divest from the two hundred largest publicly traded fossil fuel companies by July 2031. The bill garnered support from stakeholders, including the California state treasurer; the California Faculty Association, which represents professors and other California State University employees; the California Federation of Teachers, another teachers’ union; and Fossil Free California.
CalSTRS and the California Public Employees’ Retirement System, along with fossil fuel lobbying groups including the California Independent Petroleum Association and the Western States Petroleum Association, opposed the bill.
“CalSTRS is focused on ensuring a secure retirement for California’s more than 1 million working and retired public school educators,” the pension fund wrote to lawmakers. “Liquidating these investments would reduce the diversification of the portfolio and create deviation from the benchmark, increasing risk and creating potential opportunity costs, which would place the CalSTRS Funding Plan at risk.”
The bill soon died in a state committee, but the activists continued to pressure CalSTRS to divest from fossil fuel companies — with some progress.
Earlier this year, a report from the Institute for Energy Economics and Financial Analysis, an energy-market think tank, found that the teachers’ pension fund moved more than $30 billion of its assets into a low-carbon investment portfolio that excludes the top five oil and gas companies.
Silvey at Fossil Free California called the divestments “a very small step to take at a time when we face both the risk of climate disruption and the consequent financial risk to our future pensions.”
CalSTRS’s leadership has stated that it needs to remain invested in fossil fuels to “shape corporate behavior for long-term sustainable growth.” But so far, there hasn’t been any meaningful change in the way fossil fuel companies conduct business, said Brooks at Stand.earth.
“I’ve been working in this space for 10 years now, and since day one of doing this work, I have heard various forms of the same argument: That they want to retain a seat at the table to be able to use their power as an institutional shareholder to modify corporate behavior,” said Brooks. “I have not seen any significant change at any of these fossil fuel companies.”
The California Teachers Association, a union representing California public schoolteachers, did not respond to a request for comment.
A History of Underperformance
In 1980, fossil fuel stocks made up roughly 30 percent of the S&P 500’s overall value. That benchmark shrank to just 3 percent by 2024.
In 2025, the Institute for Energy Economics and Financial Analysis found that the “fossil fuel sector has underperformed the S&P 500 in seven of the last 10 years, delivering the lowest performance and highest volatility of any S&P sector.”
The report notes that oil, gas, and coal stocks “have been unreliable and inconsistent contributors to long-term investment portfolios,” in part because of renewable energy adoption and global decarbonization efforts.
“Investors should take note that the industry has spent much of the last decade dragging down long-term investment portfolios,” said Connor Chung, the institute’s energy finance analyst and coauthor of the report.
In 2023, researchers at Ontario’s University of Waterloo found that six major US pension funds could have been worth $20 billion more over a ten-year period had they divested from energy stocks and invested in other sectors.
That included CalSTRS. According to the study’s authors, state teachers could have received roughly $5,000 more over that period if the fund had replaced its energy-sector investments with nonenergy stocks.
Divesting from fossil fuel and energy sector stocks could also help secure reliable retirement funds for early career teachers, said Brooks with Stand.earth.
“The goal of these pension funds, including CalSTRS, is to be a perpetual investor,” he said. “So somebody who becomes a teacher this year, they’re not going to retire until 2066, and sinking billions of dollars into companies who have underperformed and whose end date is approaching is not a smart way of investing.”
Millions in Fossil Fuel Investments
CalSTRS hired Chan, a career pension investment officer, as a deputy chief investment officer in 2018 and promoted him to the chief investment officer in July 2024. In the meantime, during a 2022 State Council of Education meeting, Chan pushed back against divesting CalSTRS’s portfolio from fossil fuels, arguing that divestment could result in a $20 billion loss. Instead of divesting, Chan said CalSTRS could use its largesse to engage companies, influence policies, invest in climate solutions, and other matters.
The following year, state records show that Chan began buying and selling fossil fuel stocks. On April 3, 2023, Chan bought between $10,001 and $100,000 in stock for Enterprise Products Partners, a company that provides services for natural gas and crude oil companies. Two months later, he purchased another tranche of the company’s stock worth between $10,001 and $100,000, then sold off all of these investments that October.
That same year, Chan purchased shares of Plains All American Pipeline, which transports and stores oil and gas. He also bought and sold stock of railroad companies CSX and Union Pacific, which are heavily reliant on shipping fossil fuels, and bought shares of Nextera Energy Partners, a renewable energy company that at the time owned natural gas pipelines.
Since then, Chan has increased his trading in the sector. In 2024, Chan bought and sold up to $900,000 worth of stock in eleven fossil fuel companies or utilities that use fossil fuels. The following year, Chan sold shares in eleven fossil fuel and utility companies worth up to $1.1 million.
Other CalSTRS employees have also been dealing in oil and gas investments. Nile Garritson, a portfolio manager for the fund, owned up to $1.7 million in stock in eighteen fossil fuel companies and an exchange-traded fund focused on oil and gas between 2024 and 2025. Those holdings included shares of Phillips 66, Shell, the liquid natural gas exporter Cheniere Energy, and Bloom Energy, which uses fossil fuels and other energy sources to produce fuel cells for data centers and commercial uses.
David Gold, another CalSTRS portfolio manager, owned up to $2 million in Sunoco and Energy Transfer LP stock and up to $100,000 in Chevron stock in 2025.
Other CalSTRS employees have also been investing in fossil fuels. That includes its senior investment director, April Wilcox, who bought up to $10,000 in Nextera Energy stock; its director of risk mitigating strategies, Puneet Kohil, who owns up to $100,000 in BP stock, and its director of its fixed income portfolio, Rosemary Lucchesini, who owns up to $100,000 in Pacific Gas & Electric stock. (Last year, Lucchesini also sold up to $10,000 worth of stock in Trump Media and Technology Group, the parent company of President Donald Trump’s social media platform Truth Social).
All of these employees’ holdings, from Chan on down, make it harder for the pension fund to fully divest from the fossil fuel sector because doing so could affect their personal investments, said Brooks.
“Imagine a scenario where tomorrow, CalSTRS decides that it’s going to listen to the science . . . and they say we are going to divest from fossil fuels. The signal that that would send to the rest of the pension sector would be huge,” Brooks said. “The impact on the market could be significant. The impact on the holdings that [Chan] and others have in their portfolio would be detrimental.”