Pension Sense blog | April 21, 2021
Happy Earth Day from all of us at CalSTRS.
We take seriously our responsibility to be good stewards of the earth while we secure the financial future of California’s educators. When CalSTRS makes the promise of a secure retirement to a new educator, we’re also thinking about how climate change will impact our environment by the time they retire.
CalSTRS has managed climate risk in our investment portfolio for 15 years. Nearly two years ago, the Teachers’ Retirement Board directed the investments team to develop a low-carbon transition work plan to reduce climate-related risk in the portfolio and identify opportunities to invest in climate-related solutions.
Since its inception, we have made significant progress on our low-carbon work plan. Here are a few highlights of our accomplishments so far:
- The board adopted a new investment belief stating that risks associated with climate change and the global low-carbon energy transition must be considered as part of every investment decision we make.
- CalSTRS is seeking to understand how low-carbon related risks, both physical and transition, can impact investments within our portfolio, with an initial focus on our Real Estate and Global Equity asset classes.
- The board approved a new policy to create a systematic platform to expand CalSTRS’ sustainable and low-carbon investments to private asset classes. Over the coming years, we anticipate investing $1-2 billion into affordable housing and low-carbon solutions.
- CalSTRS secured significant greenhouse gas emission reduction commitments from some of our most carbon-intensive holdings.
- We pioneered a new engagement tactic—activist stewardship—to heighten our engagements with companies where traditional methods have failed to produce results.
- With our new engagement tactic in mind, CalSTRS announced our support for an alternate slate of directors at ExxonMobil to equip the board with skills and experience to improve the company’s long-term performance in a low-carbon future.
- Most recently, CalSTRS announced a new $1 billion investment in the largest ETF (exchange-traded fund) ever launched. This global equity strategy aims to identify the winners of the global low-carbon transition.
CalSTRS was established in 1913, the same year the Earth’s ozone layer was discovered. We intend on being here for our members for another hundred years as we invest for a more sustainable future.