Calpers Pressed To Drop Iran Investments

California lawmakers are considering legislation that would force state pension funds to sell billions of dollars of shares in companies doing business with Iran.

The California Public Employees' Retirement System, America's largest pension fund, and the state teachers' fund would have to unload shares in companies including BNP Paribas of France, Siemens AG of Germany, and Eni SpA of Italy.

"Who's funding terrorism? It sure as hell shouldn't be our public employees," a Republican assemblyman from California who introduced the measure, Joel Anderson, said. "When you're looking at the war on terrorists, this is one of the best weapons we have — just defunding them." Mr. Anderson estimated his legislation would affect $24 billion worth of investments.

California, which last year directed state pension funds to drop investments in Sudan, is among a growing number of states, from Texas to Maryland to New Jersey, moving to embrace so-called "terror-free" investing.

The movement, which includes federal legislation, against nations the State Department says sponsor terrorism, may put public pension managers in a frontline role in a debate over international policy. Some critics say the effort is misguided and would hurt small investors.