US - The California Public Employees' Retirement System (CalPERS) has expanded its corporate governance guidelines to measure companies' commitment to environmental issues and to encourage firms to increase women and minority representation on their boards.
The environmental guidelines are aimed at getting companies to disclose and act upon climate risks like carbon emissions that, if unaddressed, could diminish investment returns. They reference the 14-point "Corporate Governance Checklist" developed by Ceres, a coalition of investors, environmental groups and investment funds.
The diversity guidelines will create best practices, including the practice of requiring that diversity be included among factors used to assess corporate board nominees
State Controller John Chiang, who proposed the guidelines, said: "Diversity is a solid business proposition that fosters good corporate governance by ensuring a wider range of talents, ideas, experiences, and viewpoints for corporate boards across the nation. The faces of companies' shareholders are rapidly changing, and to tap into a broad range of talents and ideas, corporate boardrooms should reflect the changing diversity to help us maintain a competitive edge in today's global markets."
Chaing added that CalPERS needed solid information about a company's environmental risks and opportunities, so it could grow its bottom line while shrinking its carbon footprint.
He said: "The two environmental actions adopted by CalPERS will provide us with better information about the climate risks and opportunities in our portfolio.
"Our board will be the first fund to engage companies and investment managers on these particular steps, and we will lead the way for other institutional investors to follow. These two steps will significantly impact the way analysts, managers and companies evaluate climate risks, will improve the transparency of climate risks, and will encourage more consistency in how companies disclose their responses to climate risks."
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