Teachers’ Retirement Board addresses climate change in investment portfolio
Low-Carbon Transition Work Plan will guide CalSTRS over next 18 months.
WEST SACRAMENTO, Calif. (October 7, 2019) – The Teachers’ Retirement Board initiated the implementation of a Low-Carbon Transition Work Plan at its October meeting. The transition plan builds on more than 15 years of work in climate-risk mitigation strategies.
The plan will guide CalSTRS in managing climate-related risk and identifying opportunities to invest in climate-related solutions across asset classes.
“There is no debate that climate change poses risks to the CalSTRS investment portfolio, and if unchecked, greenhouse gas emissions will have devastating impacts on society and the economy,” said Investment Committee Chair Harry Keiley. “CalSTRS is methodically and prudently examining how to prepare the fund to meet the retirement obligations of our members, while also adjusting to a low-carbon future.”
CalSTRS is methodically and prudently examining how to prepare the fund to meet the retirement obligations of our members while also adjusting to a low-carbon future.
Investment Committee Chair
The board heard presentations from external experts as well as staff recommendations for starting to assess the low-carbon transition readiness of different investment portfolios. Trevor Houser, a partner and lead of the Energy & Climate team at the Rhodium Group, discussed the economic and financial risks of climate change and how policymakers, regulators and central bankers are responding to the low-carbon transition. Alicia Seiger, the lead of sustainability and energy finance initiatives at Stanford Law, Graduate School of Business and the Precourt Institute for Energy, presented on risk management and innovation in a changing climate.
“The physical risks of climate change are clear, and the need for an efficient and effective transition to a low-carbon economy is urgent,” said State Controller and ex officio board member Betty Yee. “Our members look to us to ensure the long-term value and success of the fund. I am pleased to see CalSTRS using all due diligence to manage this transition responsibly, exercising their fiduciary duty of care.”
The plan also includes continuing to work with state and global partners to engage public policy makers and corporations in support of a just low-carbon transition. The board will hear additional items on the Low-Carbon Transition Work Plan at subsequent meetings.
The California State Teachers’ Retirement System, with a portfolio valued at $238.3 billion as of August 31, 2019, is the largest educator-only pension fund in the world. CalSTRS serves California’s more than 949,000 public school educators and their families from the state’s 1,700 school districts, county offices of education and community college districts. A hybrid retirement system, CalSTRS administers a combined traditional defined benefit, cash balance and voluntary defined contribution plan. CalSTRS also provides disability and survivor benefits. CalSTRS members retire on average after more than 25 years of service, with a median retirement age of 62.9, and a monthly pension of approximately $4,475, which is not eligible for Social Security participation. For more data, download the Fast Facts 2018 brochure.
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