US - The California Public Employees' Retirement System (CalPERS) is to implement environmental, social and governance (ESG) commitments developed with think-tank Ceres.
CalPERS chief executive officer Anne Stausboll, speaking as co-chair of Ceres, announced four commitments by CalPERS to implement the "CalPERS/Ceres vision".
Ceres, a national not-for-profit coalition of investors, environmental organisations and public interest groups, sponsored a day-long planning ESG commitment development session last December at the CalPERS headquarters in Sacramento. Ceres works with companies to address sustainability challenges such as global climate change and water scarcity.
The proposals outlined by Stausboll include plans to:
- Complete a process by August for integrating ESG actions into investment decision-making in a uniform way across all five CalPERS asset classes (public and private equity, real estate, fixed income, and inflation-linked commodities, infrastructure, forestland and bonds).
- Generate the first annual responsible investment report to the CalPERS Board in September detailing how the pension fund will take a total fund approach to integrating ESG objectives.
- Integrate the Ceres Roadmap for Sustainability into CalPERS corporate governance engagements with public companies, including the fund's annual Focus List programme identifying underperformers for private engagements with investment staff.
- Collaborate with the California State Teachers' Retirement System (CalSTRS) and other signatories of the Investor Network on Climate Risk (INCR) to encourage Russell 1000 companies to address environmental sustainability issues.
Stausboll said: "Two dozen top executives from Fortune 500s, organised labour, foundations, investment firms and pension funds discussed the urgency of the challenges before us and what we could do collectively and individually to catalyse global-scale action."
CalPERS already has substantial ESG-related investments, including $1.5bn in private equity clean technology, more than $500m in an internally-managed public stocks environmental index fund, a successful five-year program that reduced real estate energy use by 20%, continuing engagements with portfolio companies on ESG issues, and collaboration with CalSTRS in launching an independent database for potential corporate board candidates who have diverse backgrounds.
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