We believe a long-time investment horizon is a responsibility and advantage. This long-time horizon requires we advocate for public policies that promote fair, orderly, and effectively regulated capital markets. Guided by our Investment Beliefs and Global Principles, we participate in domestic and international policy development to advance the interests of long-term investors and encourage policymakers to take actions that instill trust and confidence in global financial markets.

Of particular importance to CalPERS are legislation and regulations that foster corporate accountability to shareowners (governance), enhance the usefulness and integrity of financial reporting (transparency), and mitigate risks to the global financial system (systemic risk).

More information is available below and in our Investment Committee updates, which are given during Board Meetings.

As an active member of the Council of Institutional Investors, we signed a letter urging U.S. Congressional leaders to consider a number of key corporate governance improvements for inclusion in financial market regulatory reform legislation. The corporate governance improvements considered to have the greatest impact for financial market reform legislation include:

  1. Majority voting standards in director elections
  2. Shareowner access to the proxy for the purpose of nominating directors
  3. Abolishing the ability of brokers to vote uninstructed broker proxy votes
  4. Establishing a Board structure under the leadership of an independent Board chairperson
  5. Board use of independent compensation advisers
  6. Annual advisory shareowner vote on executive pay
  7. Stronger executive compensation clawback provisions
  8. Severance pay limitations that ensure greater pay-for-performance alignment

As an investor and provider of long-term capital, we have a great interest in the improvement and integrity of financial reporting. Investors and shareowners should expect auditors to bring integrity, independence, objectivity, and professional competence to the financial reporting process. Public and investor confidence and stability are essential to the success and effective functioning of the capital markets. To ensure confidence, we provide leadership through substantive initiatives, including:

We voted in favor of the Council of Institutional Investors' endorsement of the July 2009 Investors' Working Group report U.S. Financial Regulatory Reform: The Investors' Perspective. The report provides an investor perspective on recommendations to improve regulation of U.S. financial markets focusing on four major areas the financial crisis revealed to be fundamentally flawed:

  1. Strengthening and reinvigorating existing federal agencies responsible for policing financial institutions and markets and protecting investors and consumers
  2. Filling the gaps in the regulatory architecture and authority over certain investment firms, institutions, and products
  3. Improving corporate governance at U.S. financial companies
  4. Designating a systemic risk regulator, with appropriate scope and powers

CalPERS' Advocacy on Financial Market Issues