CalSTRS Purchases Portfolio’s First Social Bond
Multimillion dollar bond will help women-owned businesses and low-income communities in emerging markets
WEST SACRAMENTO, Calif. – The California State Teachers’ Retirement System today announced its first social bond purchase, worth $5 million. Bond proceeds will go toward financing women-owned enterprises and projects for low-income communities in emerging markets, while providing competitive returns to the teachers’ fund.
CalSTRS is one of more than 40 institutional investors to buy into a three-year, $500 million global benchmark bond issued on March 22, 2017, by the International Finance Corporation, part of the World Bank.
“Using financial vehicles that provide potential for us to do well, while also doing good, is a double win for us.”
Christopher J. Ailman
CalSTRS Chief Investment Officer
“We are proud to be part of a brave new world of innovative financing that meets the needs of previously untapped, deserving markets,” said CalSTRS Chief Investment Officer Christopher J. Ailman. “Using financial vehicles that provide the potential for us to do well, while also doing good, is a double win for us. It furthers our goal of providing a stable financial future for our members—the public school educators of California—with a fiscally sound investment, while also supporting low-income populations and women entrepreneurs.”
Proceeds from this bond will invest in activities such as:
- Companies that source directly from smallholder farmers.
- Investments in utilities that provide low-income households with better access to services.
- Companies that provide more affordable health and education services or housing to low-income populations.
- Companies that provide goods and services to low-income populations.
- Companies that provide telecommunication and payment platforms in markets that include low-income users.
- Lending to financial intermediaries that lend to women-owned enterprises.
The market focus of this bond incorporates 4.5 billion people at the bottom of the financial pyramid who have $5 trillion in purchasing power, according to the IFC.
The California State Teachers’ Retirement System, with a portfolio valued at $202 billion as of February 28, 2017, 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. We also provide disability and survivor benefits. CalSTRS serves California’s more than 914,000 public school educators and their families from the state’s 1,700 school districts, county offices of education and community college districts.
See how CalSTRS demonstrates its strong commitment to long-term corporate sustainability principles in its annual Global Reporting Initiative sustainability report: Fostering a Secure Future.