Blog entry Jack Ehnes

Environmental Activist, U.S. Vice President and Generation Chairman Al Gore Speaks to the CalSTRS Board – 2/9/2015

Environmental Activist, U.S. Vice President and Generation Chairman Al Gore Speaks to the CalSTRS Board – 2/9/2015

It was truly an honor to hear these gentlemen speak on the relevance of climate change as it relates to global, institutional investors such as CalSTRS. Generation presented their views and findings on climate change and how a large institutional investor might prepare and develop an investment portfolio for a low carbon economy. In this short video clip, Mr. Gore speaks to the advantage CalSTRS enjoys in long-term investing.

Long-term investment strategy practices patience and dedication in the market. It involves dialogue and engagement with the companies in which we invest. This perspective considers 30-year horizons and focuses on building investment and reinvestment values over time, versus making short-term decisions without consideration of the long-term ramifications. Institutional investors often benefit from this competitive advantage.

Generation is one of two U.S and non-U.S., global sustainable managers hired by CalSTRS in 2007 as part of the CalSTRS mission to capture opportunities and manage risks associated with global sustainability issues. Generation has become one of the leading ESG-focused investment managers in the world. Currently, Generation is contracted with CalSTRS to manage about $542 million, at year-end 2014, of non-U.S., publicly-traded equity securities.

Although many traditional investment managers consider ESG factors when investing, it is the emphasis and consideration given to ESG issues that differentiates sustainable investment managers like Generation from other firms. Generation is also one of the few investment managers to establish a foundation for part of their net profits which are designed to strengthen the field of sustainable capitalism.

As part of our ever-expanding commitment to ensure our mission to California’s educators, CalSTRS must grow strategically and resourcefully for the long term. For the fund, that growth must be sustainable. To support these efforts, we’ve recently issued our eighth annual report on sustainable investment strategies and revamped our CalSTRS.com to provide a new Sustainability section. CalSTRS believes that the underlying risks of climate change should be addressed now. Approaches to how climate change should be addressed will be further considered in the coming year. 

The link to the entire presentation can be found here.

Comments

Climate Change and Sustainable Investing

Ceres commends CalSTRS' leadership in incorporating long-term sustainability risks and opportunities into its investment strategy and practices. As Messrs. Gore and Blood point out, climate change and carbon assets pose increasing risks to investors, and there are growing opportunities in investing in solutions to climate change and the global transition to a low carbon, clean energy economy. CalSTRS commitment to increase its clean energy investments puts the fund at the forefront of recognizing and acting on this expanding opportunity set.

Divestment, not Engagement

Dear Mr.Ehnes, I appreciate the intention of CalSTRS to invest in a sustainable and responsible way, one which serves the members as well as the planet in the long run. However, I don't think engagement is a strategy that has worked well, certainly not fast enough or effectively enough to address the climate change issues we face as a state and planet. I would encourage you to take leadership on this issue and divest from holdings in coal, at the very least. This makes economic as well as environmental sense. Thank you for your consideration of this issue. Kathy Barnhart, CalSTRS member

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