News release | Thomas Lawrence

WEST SACRAMENTO, Calif. (March 27, 2024) – As peak proxy voting season begins, the California State Teachers’ Retirement System, the world’s largest educator-only pension fund, is pressing corporate boards to measure, mitigate and reduce methane emissions and disclose critical workforce data.

CalSTRS will also continue taking strong action against portfolio companies that fail to demonstrate their commitment to appropriately managing and addressing sustainable business practices.

In the 2023 proxy season, CalSTRS voted against the boards of directors at a record 2,035 global companies because they did not provide necessary climate risk disclosures.

Proxy voting is just one of the several effective tools CalSTRS uses to influence positive change and drive returns while minimizing risk. CalSTRS continues to participate in collaborative engagements throughout the year, including through Climate Action 100+, an investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change.

And 2024 has seen significant progress related to climate change across financial markets. The SEC's recent adoption of its climate-related disclosure rules marks a crucial step toward more reliable, consistent and comparable information to assess the risks and opportunities to CalSTRS portfolio companies.

"Building on years of collaborative success, we’re continuing to use our influence as a long-term shareholder to impact the world’s highest greenhouse gas-emitting companies and their sustainability,' said Aeisha Mastagni, a senior portfolio manager on CalSTRS’ Sustainable Investment and Stewardship Strategies team. “We’re asking our portfolio companies that have not already done so to take meaningful action toward measuring, disclosing and reducing methane emissions, one of the most economically viable and immediate means to slow climate change."

Specifically, CalSTRS is calling upon eligible companies to join the Oil and Gas Methane Partnership 2.0 (OGMP 2.0), a United Nations-led framework committed to the measurement, reporting and mitigation of methane emissions. OGMP 2.0 is an independent initiative that requires members to measure their methane emissions (as opposed to simply estimating them) and set credible reduction targets.

Since CalSTRS began engaging energy companies regarding OGMP 2.0 at the beginning of 2023, 15 have joined, including ExxonMobil and Chevron.

Additionally, CalSTRS plans to vote in favor of all proposals initiated by other shareholders calling on portfolio companies to join the partnership.

CalSTRS is focused on this issue because:

• Methane is potent: Methane’s warming potential is 80 times greater than carbon dioxide over the course of 20 years. It has also accounted for 30% of the rise in global temperatures since the Industrial Revolution.
• Methane is under-reported: Analysis from the International Energy Agency (IEA) indicates methane emissions are approximately 70% greater than estimated worldwide.
• Reduction is cost-effective: The IEA estimates 30% of methane emissions from fossil fuel operations can be abated with no net cost.

CalSTRS also has a rich history of success in engaging companies on board composition and diversity. CalSTRS is putting its portfolio companies on notice to provide better disclosure around their entire workforce.  

Companies should annually disclose data from their Employer Information Report to enable shareholders to understand the composition of the workforce and to add context to investment and strategy decisions. This report breaks down workforces by gender, race/ethnicity and job category.

Every American company with at least 100 employees is already required to submit these details to the government, but disclosing workforce details to investors is a new practice. There is no standard, and the practice is still highly unregulated.

For example, at the start of 2020, only 5% of the S&P 500 companies publicly disclosed their Employer Information Report data. In 2024, thanks in large part to pressure from institutional investors, the world’s largest private asset managers and nonprofits, more than 75% of S&P 500 companies either make the data public or have committed to future disclosure.

While CalSTRS did not submit shareholder proposals calling for broad workforce disclosure this proxy season, other entities have. CalSTRS supported and plans to continue to back proposals aligned with CalSTRS' Corporate Governance Principles.

"This reporting can help us gauge corporate culture and identify potential risks or opportunities associated with diversity, equity and inclusion efforts," Mastagni said. "These insights into workforce composition are invaluable to our team as we seek long-term company success on behalf of California’s public educators and their retirements."

CalSTRS will also continue holding portfolio companies to its climate disclosure and board diversity-related standards from 2023.

While CalSTRS strategies and engagement methods vary with each company within its broadly allocated investment portfolio, the goal is always the same: to minimize risk and influence long-term value creation and sustainable business practices for generations to come, which in return will help ensure California's public educators have a secure retirement.

See CalSTRS' Stewardship Priorities fact sheet and proxy voting records for more information.

Media contact

Thomas Lawrence
Phone: 916-414-1440
M-F, 8 a.m. - 5 p.m. PDT
Newsroom@CalSTRS.com

About CalSTRS

CalSTRS provides a secure retirement to more than 1 million members and beneficiaries whose CalSTRS-covered service is not eligible for Social Security participation. On average, members who retired in 2022–23 had 25 years of service and a monthly benefit of $5,141. Established in 1913, CalSTRS is the largest educator-only pension fund in the world with $331.4 billion in assets under management as of February 29, 2024. CalSTRS demonstrates its strong commitment to long-term sustainability principles in its annual Sustainability Report.