California's plan to put state pension funds in socially responsible investments means those funds are worth billions less than they would be if they'd been allowed to invest in tobacco companies and emerging markets, BusinessWeek reports. The initiative, launched in 2000, also pushed investment in California real estate—where the funds are on the hook for some big losses in a down market.
"Like it or not," BusinessWeek's Christopher Palmeri writes, "people do gamble, smoke, and buy expensive nuclear-powered war machines." After a diplomatic disaster in the program's early years, and $400 million in lost gains, one fund dropped its stance against emerging markets. Another plans to consider reinvesting in tobacco—which will offset some of what are sure to be huge losses as the real-estate market finds bottom.