Board advances net zero progress
CalSTRS continues to move forward on its pledge to achieve a net zero investment portfolio by 2050 or sooner by prudently integrating climate change considerations that will support the retirement security of California’s educators.
The Teachers' Retirement Board Investment Committee, at its May 4, 2023, meeting, approved a plan to lower carbon emissions within the Fixed Income Portfolio. The board voted to incorporate an initial carbon reduction of approximately 12%.
Net zero means the amount of greenhouse gases emitted by humans is offset by the amount taken away, either by natural means, such as forests, or by technology, such as carbon capture and storage.
In 2021, the board approved CalSTRS' pledge to achieve net zero portfolio emissions by 2050 or sooner. And in May 2022 the board approved a plan to reduce emissions in CalSTRS' Public Equity Portfolio by adopting a target allocation of 20% of its passive exposure to a low-carbon index resulting in carbon reductions of 14%.
By approving the 12% reduction in the Fixed Income Portfolio, the board is taking concrete actions toward its net zero emission pledge. This reduction is designed to effectively reduce carbon emissions in alignment with CalSTRS’ risk and return goals.
The CalSTRS risk and actuarial teams reviewed the plan and believe it aligns with the CalSTRS Funding Plan, which points to CalSTRS achieving full funding by 2046.
CalSTRS has also made significant progress increasing the portfolio’s exposure to low-carbon investments that meet the fund’s risk and return goals. In the last year, the CalSTRS Sustainable Investment and Stewardship Strategies team deployed more than $1.3 billion into low-carbon investments, including:
- A $350 million commitment to a strategy supporting the decarbonization of the U.S. energy market.
- A $60 million commitment to a strategy fund that provides technology-enabled low-carbon solutions.
Since 2017, CalSTRS has helped engage and influence the world’s largest greenhouse gas emitters via Climate Action 100+, an initiative of more than 600 investors working with the companies they invest in to reduce emissions.
During this proxy season, when corporations hold annual meetings to elect board members and vote on shareholder proposals, CalSTRS plans to cast votes against the boards of the largest global companies and emitters that do not provide minimum requirements for climate-related disclosures. These minimum requirements include financial reports that align with the recommendations of the Task Force on Climate-Related Financial Disclosures and the company’s direct emissions (scope 1) and indirect emissions (scope 2). For more information, visit CalSTRS’ Path to net zero.