CalSTRS Board commits to net zero investment portfolio
- Commitment aligns with accelerated global movement to net zero and will enable Fund to prudently manage risk and identify net zero aligned investment opportunities
- Four-part implementation framework will guide path to net zero emissions
- The net zero pledge is rooted in our promise to deliver a secure retirement for California’s educators
WEST SACRAMENTO, Calif. (September 1, 2021) – The Teachers’ Retirement Board (TRB) today committed to achieving net-zero greenhouse gas emissions across its investment portfolio by 2050 or sooner, aligning with the science-based targets of the Paris Agreement.
The TRB, which governs the California State Teachers’ Retirement System (CalSTRS), also approved a four-part implementation framework to chart its path to net zero, consistent with the United Nations’ Race to Zero campaign, the largest global effort to address climate change:
- Pledge: Commit to net zero investment portfolio by 2050 (action taken today);
- Plan: Develop a Net Zero Action Plan that will establish a baseline and milestones for managing emissions-related risks; expand investments in low-carbon solutions; and drive ongoing engagement with companies in the CalSTRS portfolio to promote a responsible net zero transition;
- Proceed: Establish actions for the next year to ensure clear internal governance structures; appropriate methodologies and frameworks to support net zero commitments; portfolio emissions measurement; and interim goals; and
- Publish: Provide and encourage regular reporting on progress toward net zero investments.
“CalSTRS’ commitment to a net zero investment portfolio builds on a prudent process analyzing the effects on the fund of the low-carbon transition and more than 20 years of progress using our influence as a significant global investor to promote long-term sustainable public policies and business practices,” said TRB Chair Harry Keiley. “Climate change threatens our future, and its links to business and financial investments are undeniable. This pledge is rooted in our century-long promise to deliver a secure retirement for California’s public educators and their families.”
The TRB adopted an investment belief in January 2020 that investment risks associated with climate change and the related economic transition materially impact the value of CalSTRS’ investment portfolio. In October 2019, CalSTRS embarked on a multi-year Low-Carbon Transition Work Plan to better understand and align its investment portfolio with the changing climate landscape. Since 2004, CalSTRS has invested in climate-oriented solutions and integrated climate risk considerations into its investment and stewardship activities.
“We support the global movement to achieve a net zero economy by 2050, or sooner, by taking action to align the world’s governments, companies and investors with the science-based emissions targets of the Paris Agreement,” said Sharon Hendricks, TRB Vice Chair. “The investment risks and opportunities associated with the net zero transition are accelerating due to increasing global urgency and momentum to achieve the goals of the Paris Agreement. We will review our Net Zero Action Plan annually to adjust, adapt and respond to changing market developments, best practices and lessons learned from around the globe.”
CalSTRS will continually report on its progress toward net zero to the TRB Investment Committee.
Net zero commitment builds on past climate investment efforts
CalSTRS’ climate change-related investment activities have accelerated in the past five years, in light of the Paris Agreement and include several milestones:
- 2016: Investing in a low-carbon public equities index with significantly lower exposure to carbon emissions.
- 2017: Implementing thermal coal exclusions in the CalSTRS Investment Portfolio.
- 2019: Adopting the Low-Carbon Transition Work Plan.
- 2020: Supporting the development of the California Climate Investment Framework with the California Department of Finance.
- 2021: Funding two low-carbon transition readiness exchange-traded funds (ETFs) and the election of three dissident directors to the ExxonMobil board.
CalSTRS provides a secure retirement to more than 975,000 members whose CalSTRS-covered service is not eligible for Social Security participation. In 2019-20, members retired on average after more than 24 years in the classroom with a monthly benefit of about $4,614. Established in 1913, CalSTRS is the largest educator-only pension fund in the world with $310.9 billion in assets under management as of July 31, 2021. CalSTRS demonstrates its strong commitment to long-term corporate sustainability principles in its annual Global Reporting Initiative Sustainability Report. For more information, visit CalSTRS.com.