CalPERS Announces $100 Billion Net Zero Pledge and New Climate Accountability Measures
November 13, 2023
Communications & Stakeholder Relations
Office of Public Affairs
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SACRAMENTO, Calif. – CalPERS announced Monday a sweeping sustainable investing strategy to accelerate moving the fund’s portfolio toward net zero, where carbon emissions from investments are evenly balanced with carbon reductions. The new effort will commit $100 billion toward climate solutions by 2030 and ensure corporate accountability through the sale of investments that do not have a credible plan to reduce carbon emissions.
The plan was officially presented to the investment committee of the Board of Administration. The Sustainable Investments 2030 Strategy (PDF) lays out additional efforts to diversify corporate leadership and enhance existing policy that affirms the importance of sound labor principles.
“Our 2030 strategy for sustainable investing is the next step in CalPERS’ efforts to improve our long-term investment returns while also making meaningful progress in the fight against climate change,” said Chief Executive Officer Marcie Frost. “In addition, we are continuing the important work of promoting inclusive corporate leadership and the rights of workers.”
The Sustainable Investments 2030 Strategy offers a series of attainable and specific actions to reduce the carbon emissions intensity of CalPERS’ investments by 50% by the year 2030. The plan is part of the agency’s overall goal to balance carbon emissions from its investments with carbon reductions by 2050.
“CalPERS is providing a tangible and measurable roadmap as we look to support companies, projects, and technologies that are playing a crucial role in promoting sustainable investing, reducing greenhouse gas emissions, and supporting the transition to a low-carbon economy,” said Interim Chief Investment Officer Dan Bienvenue. “Our plan is expansive and addresses the need for climate solutions across every industry and not just fossil fuels.”
CalPERS currently has close to $47 billion in low-carbon assets. The new commitment would more than double that amount.
“These investments, which we believe can be made across an array of asset classes, will be designed to generate excess returns and boost our earnings in service to the mission of meeting our members’ retirement dreams,” said Peter Cashion, CalPERS’ managing investment director for sustainable investing.
The Sustainable Investments 2030 Strategy will also establish clear accountability for companies when it comes to reducing the size of their carbon footprint. CalPERS investment managers will develop a process to exit certain securities that do not have a credible net zero plan.
“We believe in engaging with these companies,” Cashion said. “But we will make it clear that refusing to move toward climate solutions puts our investments at risk, which is counter to our fiduciary duty.”
The CalPERS net zero plan is based upon the belief that responsibility for decarbonizing both the portfolio and economy should not be passed off to others by a passive divestment effort. In fact, the plan partly relies on financial backing for companies that are committed to the transition from “brown” to “green” energy production.
Beyond climate change, the Sustainable Investments 2030 Strategy promotes diversity, equity, and inclusion through a variety of efforts. Those include surveying external managers to keep track of their diversity achievements as well as continued efforts on regulatory requirements and shareowner action. And it brings a new focus on human capital management by advocating for more corporate reporting, improved workforce valuations, and promotion of labor principles that ensure the fair treatment of workers.
For more than nine decades, CalPERS has built retirement and health security for state, school, and public agency members who invest their lifework in public service. Our pension fund serves more than 2 million members in the CalPERS retirement system and administers benefits for more than 1.5 million members and their families in our health program, making us the largest defined-benefit public pension in the U.S. For more information, visit www.calpers.ca.gov.