CalSTRS Investments Studied for Low-Carbon Economy Opportunities

News release Michael Sicilia

WEST SACRAMENTO, Calif. – The California State Teachers’ Retirement System has released the results of a research study by Mercer examining ways to mitigate investment risk and maximize value in the face of our deteriorating global climate. Investing in a Time of Climate Change: California State Teachers’ Retirement System Portfolio Climate Change Risk Assessment seeks to gain better insight into the various investment implications presented by climate change.

“To achieve a key element of the December 2015 Paris Agreement–keeping the increase in global average temperature well below 2°C relative pre-industrial levels–necessitates an expansion of policy action,” said CalSTRS Chief Executive Officer Jack Ehnes. “For institutional investors like CalSTRS, supportive policies will ease our ability to deploy appropriate capital to the market.”

The tailored study estimates portfolio return implications under four climate change scenarios and recommends appropriate actions by drilling down to industry-level detail in each asset class within the CalSTRS portfolio to capture low-carbon economic growth opportunities and mitigate long-term risks.

“CalSTRS, with more than a century of experience, is able to leverage long-term investment horizons that seek to benefit generations of educators to come,” noted Mr. Ehnes. “Years ago we recognized that climate change presented both risks and opportunities to the portfolio, and proactively set processes in place that engage industries and regulators to make positive changes.”

The research underpinning the CalSTRS report was conducted in collaboration with Mercer and 17 other participants. The full public study Investing in a Time of Climate Change is available on Mercer’s website.

“CalSTRS is already dedicated to climate change risk management, as evidenced by the many activities undertaken by its Green Team. This report will give CalSTRS the opportunity to build upon its strong foundation as a ‘Future Maker’ and embed climate risk considerations across its portfolio of investments,” said Jane Ambachtsheer, Global Chair of Responsible Investment at Mercer.

The California State Teachers’ Retirement System, with a portfolio valued at $179.4 billion as of January 31, 2016, is the largest educator-only pension fund in the world. CalSTRS administers a hybrid retirement system, consisting of traditional defined benefit, cash balance and voluntary defined contribution plans. CalSTRS also provides disability and survivor benefits. CalSTRS serves California’s 896,000 public school educators and their families from the state’s 1,700 school districts, county offices of education and community college districts.

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