Have you ever wondered what CalPERS is referring to when we talk about the "S" (or "social") factor in environmental, social, and governance (ESG)? To us, the "S" means human capital. When we think of the managers overseeing our investments, the people who work for the companies — and their suppliers — in our portfolio, the customers who buy our portfolio companies' products, and the communities affected by our portfolio companies' operations, we see human capital as a clear driver of value.  

Unfortunately, there are no standards for measuring and reporting on human capital topics, making it difficult for investors to truly understand related risks and opportunities. This is why we're engaging with standards-setters, regulators, and other investors to call for improved disclosures around human capital topics such as human capital management policies, practices, and performance.

Universal reporting standards would allow us to better understand and assess how our portfolio companies and external managers are managing their talent and other key human capital drivers of business.

We believe proper management of human capital is vital to the success of companies we invest in. For example, we've had a Responsible Contractor Policy in place for our Real Assets portfolio for many years.

While engaging our external investment managers and portfolio companies on various human capital topics and reporting, we seek to understand their strategies surrounding workforce, diversity, culture, and organizational decision-making.

Our Work in 2019

  • Offering an educational diversity and inclusion event for CalPERS and CalSTRS external managers and members of the investment industry
  • Conducting a diversity and inclusion survey of our external managers to identify key best practices and opportunities for engagement with current partners on practices and policies
  • Research on such human capital topics as economic inequality, which can be viewed in our Sustainable Investments Update (PDF), workforce transition, diversity and inclusion, and sexual harassment
  • Confidential engagements with public and private companies on a variety of human capital issues identified as risks in our portfolio

You can find more information below on our program's work on human capital, including our Responsible Contractor Program Policy, Diversity Forum and surveys, and key partnerships.
Consideration and management of human capital in investments is an emerging space. We look forward to reporting on our efforts over time as we navigate this evolving part of the investment landscape.

As a member of the Human Capital Management Coalition, we support efforts to elevate human capital management as a critical component in company performance. We participated in the submission of a rulemaking petition to the U.S. Securities and Exchange Commission requesting enhanced disclosures.

We partnered with other asset owners and asset managers to create the Responsible Civilian Firearms Industry Principles as a framework to advance a responsible civilian firearms industry in the U.S.

Partnerships are critical to our human capital strategy as they allow us to share experience, pool resources and scale influence. With these global partners, we have engaged and collaborated with companies to better understand human capital risks and opportunities.

Human Capital Management Coalition
Understanding and improving how human capital management contributes to the creation of long-term shareholder
CalPERS: Co-Founder and Active Member

Council of Institutional Investors
Promoting governance policies that enhance long-term value for institutional asset owners and their beneficiaries
CalPERS: Co-Founder Co-Chair of International Committee

UN Principles Responsible Investment
Network to incorporate ESG issues into decision making and ownership practices
CalPERS: Founding Signatory and Active Member

International Corporate Governance Network
Promoting effective global standards of corporate governance and investor stewardship
CalPERS: Co-Founder, Holds Board Seat, Chair of Disclosure & Transparency Committee

Sustainable Accounting Standards Board
Developing standards to help businesses manage and report on the sustainability topics that matter most to investors
CalPERS: Investor Advisory Group Member

G7 Investor Leadership Network
Collaborating with investors in G7 countries interested in addressing sustainability and long-term growth
CalPERS: Steering Committee Member

Engaging, empowering, and connecting limited partners to maximize their performance
CalPERS: Co-Founder and Active Member

2019 CalPERS & CalSTRS Diversity Forum

The Diversity Forum assembled an outstanding lineup of CalPERS and CalSTRS board members and senior staff, institutional investors, business and academic leaders, and consultants from around the country to explore how diversity and inclusion is changing the financial industry — and the way we invest. Visit our Diversity Forum page to learn more about the event, and review information and resources from past events.

2019 CalPERS External Manager Diversity and Inclusion Survey

The 2019 survey was designed to communicate to our external investment managers areas of importance to us, while helping our staff understand the diversity and inclusion status and practices of our external investment managers. The voluntary survey requested information on diversity of workforce and policies and practices related to workplace culture and compensation, recruitment and retention, and diversity and inclusion.

The CalPERS 2019 survey is one of the most inclusive Diversity and Inclusion surveys in the asset management industry to date, covering topics including harassment policies, pay equity, disability, recruitment, portfolio level company board diversity, ownership, and workforce diversity.

The Statement of Investment Policy for Responsible Contractor Program demonstrates our support and encouragement of fair wages and benefits for workers employed by its contractors and subcontractors, subject to fiduciary principles concerning duties of loyalty and prudence, both of which further require competitive returns on our real estate and infrastructure investments.

Visit our Responsible Contractor Program page for more information on the program, policy, and reporting.

Reports & Updates