Blog entry Jack Ehnes

Answering the Call to Global Action on Climate Change

Global leaders gathered at the United Nations Climate Summit 2014 in New York this September in a show of solidarity for climate change policy. CalSTRS was among the more than 800 organizations to contribute to what many hope is the beginning of a comprehensive global agreement on climate change anticipated to take place in Paris in December of 2015.

Summit attendees were comprised of international heads of government, finance, business and various environmental organizations. Each came with a response to U.N. Secretary General Ban Ki-moon’s call for bold action on climate change.

The U.N. website mentions three major pension funds from North America and Europe which, at the summit, announced plans to accelerate their low-carbon investments. CalSTRS was one of the North American funds to take such action. In support of scaling up clean energy investments, we announced plans to increase clean energy and technology investments from $1.4 billion to $3.7 billion by 2019 across all asset classes. Our commitment to step-up clean energy and technology investments and see a universal climate agreement come to fruition runs deep.

This year, the Teachers’ Retirement Board elevated sustainable investments as a key, strategic priority for the fund. In response, CalSTRS has been actively pursuing low carbon/clean energy investments through its Green Initiative program, with clean technology private equity investments, green bonds, green buildings and renewable infrastructure funds. Globally, institutional investors like CalSTRS, with a desire to see action on climate change, also search for appropriate clean energy, low carbon investments.

Collectively, our goal is to reduce portfolio risks associated with climate change and high carbon assets, and to find new sustainable investment opportunities that meet each organization’s risk return criteria. While some organizations may employ different methods to achieve this goal, for example, divestment verses engagement, we firmly agree on one thing: Action on climate change must happen now.

If we are to preserve our natural resources, we must begin a global transition to a low carbon economy. This will require significant increases in clean energy investments, as explained in the Clean Trillion report by Ceres. According to the International Energy Agency, and as mentioned in the report, the world must invest at least an additional $1 trillion per year – a Clean Trillion – into clean energy by 2050 if we have any hope of limiting global warming to 2 degrees Celsius and avoiding the worst impacts of climate change on our environment, health and the global economy.

Scientific evidence clearly indicates a concerning increase in global temperatures that warrants prudent action. The NASA website states, “All three major global surface temperature reconstructions show that Earth has warmed since 1880. Most of this warming has occurred since the 1970s, with the 20 warmest years having occurred since 1981 and with all 10 of the warmest years occurring in the past 12 years. Even though the 2000s witnessed a solar output decline resulting in an unusually deep solar minimum in 2007-2009, surface temperatures continue to increase.”

Although we are not scientists, CalSTRS is an organization comprised of financial experts with a responsibility to secure the financial future of our membership – which includes all of California’s K-12 and community college educators. As financial experts, we must consider all known evidence that can impact the performance of our fund.

Our assessment of the evidence points to a need to address carbon risks to our portfolio associated with investments in fossil fuel companies. In the coming year, we will explore ways to further mitigate this risk while also taking steps to educate our stakeholders and members on our actions to increase their awareness of this critically important topic.

Comments

Thank You For Climate Change Action

Thank you for your increasing commitment to invest in clean energy as a response to the climate change issues in our world. Thank you also for considering decreasing investing in fossil fuels, or, at least, doing your best to educate those stakeholders in hopes that they too will put their own funds into energy answers for California, our nation, and our world. The discussions with fossil fuel companies surely have educated them already to some degree, and my belief is that humans who care will respond to the call for renewable and clean energy, and not hold on to the old ways that no longer serve the public good. Thanks again, Ellen Harrison

investing in clean energy

As a retired high school English/Language Arts teacher and a presenter on climate change with the Climate Reality Project, I am grateful and encouraged that CalSTRS is pursuing increased investment in renewable energy. I am pleased that my pension fund is doing both the right thing and the fiscally responsible thing. Former SEC commissioner Bevis Longstreth has explained that investments in oil, coal and natural gas will soon become "stranded assets" that are woefully overpriced in the market. It is a good sign for my personal future and for Earth's future that CalSTRS understands the necessity and the inevitability of moving toward a carbon-free future.

Glad you're part of this movement

So glad CalSTRS is joining the movement in working toward a climate change policy! This gives me hope that we may gain momentum on dealing with this issue and also sets an example for me to look more closely at my investments.

And Now Please Commitment to Divest

I'm happy to know that you're investing in the low carbon economy. What I would like to see next is for CalSRTS to express a public commitment to divest from high carbon investments including all fossil fuel companies. Make us teachers proud!

Second David's Plea to Divest from Fossil Fuel companies

As mentioned in the stranded assets video on your website, divesting from fossil fuel companies now makes sense both for the planet and from a prudent fiduciary standpoint. We don't want our retirement funds to go the way of the dinosaur because of continued investments in declining high carbon stocks.

This much and more

Having just finished reading Naomi Klein's book This Changes Everything, my sense of urgency about addressing the climate crisis has risen substantially. Yes, please increase investments in low-carbon, alternative energy businesses. And yes, please commit to a sensible plan for divestment from all fossil-fuel companies. This planet cannot bear the impact of the extraction and use of the fossil fuels claimed by the extractive industries. I know that investment returns are important, and that the fund has a fiduciary responsibility. In my opinion our collective responsibility for the health of the planet trumps all other considerations. Change needs to happen now and STRS, by its sheer magnitude, has a unique opportunity to provide leadership and instigate sustainable practices through its investment policies.

Sustainability

Upon reading the CalSTRS Sustainabilty section & viewing a video on the subject it appears that CalSTRS is embarking upon a plan to reduce or eliminate investments in the oil/coal industry. I find this worrisome, foolish and economically naive.

Since we care for our students and children...

As both a STRS member and a human being I urge you to make the most urgent divestment from fossil fuels possible. We are already seeing costly and threatening weather patterns, and our continued investment in fossil fuels will only promote worse climactic conditions that undercut both monetary and life-quality value for us, our students, our children, and grandchildren. Environmental responsibilities are not separate from portfolio responsibilities. Further, studies by Impax Asset Management, the Aperio Group, and MSCI show essentially no difference in return on fossil fuel divested portfolios vs. fossil fuel invested portfolios. Divestment does not endanger retirement benefits. Thank you for your leadership. Fossil fuel company green-washing and scare tactics notwithstanding, please move into greenhouse divestment/clean energy investment with due urgency .

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