A pair of powerful California elected officials expressed outrage Tuesday at a recommendation that the state’s largest public employee pension fund cancel its ban on investing in tobacco companies.

A staff report from the California Public Employees Retirement System calls for the agency’s directors to abandon a 16-year effort to move away from tobacco-related securities. The report estimates there are about $547 million worth of investments related to tobacco in the CalPERS portfolio.

CalPERS staffers wrote that the existing policy has left pension fund managers in limbo, and that any effort to completely divest from the tobacco industry would be “tying the hands of investment staff, thereby severely hampering staff’s ability to re-evaluate and reinvest as market conditions warrant.”

Treasurer John Chiang, who sits on the CalPERS board, said Tuesday that the pension fund needs to make a complete break with tobacco investments.

“I continue to believe that investing in tobacco-related securities is a bad economic decision for CalPERS beneficiaries, for the state in general and for the world as a whole, whether we invest directly or through others,” Chiang wrote to the agency’s investment committee.

Lt. Gov. Gavin Newsom chimed in on Tuesday afternoon, calling any full cancellation of the ban on tobacco investments “about the most perverse course of action CalPERS can take.”

Both Chiang and Newsom have announced their plans to run for governor in 2018.

CalPERS’ board of directors is scheduled to consider the fate of tobacco investments on Dec. 19.

Source: Los Angeles Times