CalPERS United Nations Net Zero Asset Owner Alliance Partnership
We joined the United Nations (UN) Net Zero Asset Owner Alliance (Alliance) in 2019, committing to accelerating decarbonization in line with limiting global warming to 1.5 degrees Celsius (°C) by 2050.
Our strategy emphasizes:
- A holistic sustainable investment approach
- Incorporating climate change risks and opportunities
- A focus on reducing greenhouse gas emissions in the real economy
Our Investment Beliefs
Our commitment to climate change is exhibited in our Investment Beliefs, including:
We may engage investee companies and external managers on their governance, sustainability issues, and environmental practices, including but not limited to climate change and natural resource availability.
As a long-term investor, we must consider risk factors that emerge slowly over long-time periods but could have a material impact on company or portfolio returns. Such as climate change and natural resource availability.
Our Commitment to Managing Climate Change Risk
We demonstrate our commitment to managing climate change risk and capturing opportunities through operationalizing our Governance and Sustainability Principles (PDF), and our investment management processes as shown in our Sustainable Investment Practice Guidelines.
Information on our climate strategy and pathway to net zero can be found in CalPERS’ Investment Strategy on Climate Change Report (PDF). This comprehensive Task Force on Climate-Related Financial Disclosures (TCFD)-aligned report features initiatives and actions we’re taking in the four channels for our pathway to net zero:
UN Net Zero Asset Owner Alliance (Alliance) members seek to reach real economy decarbonization in line with 1.5°C, primarily through:
- Engagement with companies
- Advocacy with regulators and policymakers
- Investing in climate solutions to finance the transition to a low-carbon economy
Partnership between government, business, investors, and civil society is essential to successfully navigate to net zero.
The Alliance and its members understand that this 2050 goal requires updates to assess the progress of the economy and the actions that investors are taking. Alliance members are setting near-term engagement, sector, and investment targets with the goal of real economy emissions reductions at certain time periods.
Targets, Initiatives & Updates
View our targets, initiatives, and updates in the areas of engagement with the world’s largest-emitting companies to decrease greenhouse gas emissions, sectoral decarbonization pathways, and investing in the transition to a low-carbon economy.
- We convened and cofounded Climate Action 100+, the largest global investor collaboration on climate change, to engage the world’s largest emitting companies and decrease greenhouse gas emissions.
- Climate Action 100+ has significant participation from investors across the world. More than 700 investors with $68 trillion of asset under management are engaging the 166 largest emitting companies.
- We’re committed to Climate Action 100+ engagements and continues to have a significant leadership role serving as a member of the Climate Action 100+ Steering Committee and co-chairing the Climate Action 100+ Asia Advisory Group.
- 17 of the 22 Climate Action 100+ companies that we’re engaging have now set a net zero by 2050 target or ambition.
- Bloomberg New Energy Finance assessed the progress of Climate Action 100+. As of August 2021, 111 of the 166 engaged companies had committed to a net zero by 2050 or sooner target.
- Additional progress on the Climate Action 100+ initiative is shown on the Climate Action 100+ benchmark assessment and progress update.
- We’re also leading many engagements beyond Climate Action 100+. We conduct several engagements each year on companies’ decarbonization strategies and utilize our proxy vote to influence company strategy and direction while holding companies and company boards accountable. We’re committed to engaging at least 20 companies on climate change in accordance with the Net Zero Asset Owner Alliance engagement strategy.
Transition Pathway Initiative’s (TPI) sectoral decarbonization pathways, which are based on International Energy Agency (IEA) scenarios, are widely used by investors and investor networks, including Climate Action 100+, to assess whether companies are aligned with the goals of the Paris Agreement. Specifically the goal of keeping global temperature rise below 1.5°C. This analysis informs investors, including us, and underpins our engagement with companies across the range of high-impact sectors.
We’re committed to assessing sectoral decarbonization pathways and targeting intensity and absolute real world emission reductions through engagement to bring sectors and individual companies in alignment to a 1.5°C pathway.
Carbon intensity targets for 2025 and 2030 for each sector are shown in the table below, which includes the sectoral carbon performance measure for each of the high emitting sectors. Sector and company pathways and sector statuses are available for use by everyone via the TPI online tool.
|Cluster||Sector||2025 Target||2030 Target||Sectoral Carbon performance measure|
|Energy||Electricity utilities||0.288||0.138||Carbon intensity of electricity generation (metric tonnes of CO2 per MWh)|
|Oil and gas||51.52||40.95||Carbon intensity of primary energy supply (gCO2e/MJ)|
|Transport||Automobiles||68||40||New vehicle carbon emissions per kilometre (grams of CO2 per kilometre)|
|Airlines||1071||616||Carbon emissions per revenue tonne kilometre (gCO2/RTK)|
|Shipping||5.63||4.31||Carbon emissions per tonne kilometre (gCO2/t-km)|
|Industrials and Materials||Cement||0.43||0.373||Carbon intensity of cementitious product (tonnes of CO2 per tonne of cementitious product|
|Diversified Mining||49.79||41.54||Carbon emissions per tonne of copper equivalent (tonne CO2e/tonne copper equivalent)|
|Steel||1.046||0.815||Carbon intensity of crude steel production (tonnes of CO2 per tonne of steel)|
|Aluminium||4.004||3.069||Carbon intensity of aluminium production (tCO2e/t aluminium)|
|Pulp and Paper||0.427||0.353||Carbon intensity of pulp, paper, and paperboard production (tonnes of CO2 per tonne of product)|
- We’re committed to investing in the transition to a low-carbon economy. It’s our goal to continue to identify and allocate capital to climate solutions and low-carbon investments. We will continue to be transparent in our climate solutions and low-carbon investments.
- In 2019, $12.1 billion or approximately 18% of our Private Assets were invested in climate solutions, renewable energy, and sustainably-certified buildings.
- In 2021, we had $1.4 billion in renewables and green infrastructure exposure. This represents nearly a quarter of the total infrastructure portfolio.
- In 2021, we had $637 million invested in green and sustainability bonds. Proceeds from many of these bonds are committed to environmental or climate projects, such as investing in renewable energy.