Path to Net Zero

Path to net zero

Overview

CalSTRS recognizes that climate change presents a material and existential risk to society and the economy. We are committed to influencing public policies, engaging with companies and promoting an orderly transition to a low-carbon economy through investments.

The Teachers’ Retirement Board is committed to achieving net zero greenhouse gas emissions across the CalSTRS Investment Portfolio by 2050 or sooner, aligning with the science-based targets of the Paris Agreement. The board’s decision on net zero is rooted in the promise of a secure retirement for California’s public educators and their families. Net zero means the amount of greenhouse gases emitted by humans is fully offset by the amount taken away, either by natural means, such as forests, or by technology, such as carbon capture and storage.

The board approved a four-part implementation framework to chart the path to net zero, consistent with the United Nations’ Race to Zero campaign—the largest global effort to address climate change:

  1. Pledge: Commit to achieving a net zero portfolio by 2050 or sooner (action taken September 1, 2021).
  2. 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 portfolio to promote a responsible net zero transition.
  3. 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.
  4. Publish: Provide and encourage regular reporting on progress toward net zero investments.

Watch how CalSTRS commits to net zero.

New ways we’re investing

  • Low-carbon exchange traded fund (April 2021) – We invested $1 billion into a BlackRock Transition Readiness Exchange-Traded Fund (ETF) that meets our risk-return goals and helps us better understand how companies in our portfolio are positioned for the low-carbon transition.
  • Expanding our portfolio (March 2021) – The Sustainable Investment and Stewardship Strategies team is expanding our sustainable and low-carbon investments to our private asset classes. Over the next few years, we anticipate investing $1 billion to $2 billion into private markets, initially focusing on affordable housing opportunities and then low-carbon solutions relating to energy, technology-enabled resource efficiency, water and waste management, land and agriculture management, and food security.

Recent wins in company engagement

  • Activist stewardship (June 2021) – After a monumental and months long campaign, three candidates nominated by Engine No. 1 and supported by CalSTRS were elected by shareholders to the ExxonMobil board. This historic vote represents a tipping point for companies unprepared for the global energy transition. Read our statement on this development.
  • Shareholder proposals (May 2021) – On May 12, 2021, a majority of Phillips 66 shareholders voted to pass the proposal we submitted that asked the company to address concerns regarding corporate lobbying activities inconsistent with the Paris Agreement. Phillips 66 released a report resulting from this shareholder proposal in October 2021. Read why this proxy season is a record breaker for climate proposals in an article by Mindy Lubber, CEO and president of Ceres, a sustainability nonprofit organization.
  • Collaborative engagements (multiyear effort) – Through the Climate Action 100+ engagement initiative, we secured significant emission reduction commitments with the eight corporate engagements that we lead:
Commitment Company Industry Region
Net-zero emissions by 2040 ENEOS Oil and gas refining Japan
Net-zero emissions by 2050 Duke Energy Electric utilities U.S.
Net-zero emissions by 2050 Southern Company Electric utilities U.S.
Net-zero emissions by 2050 Dominion Energy Diversified utilities U.S.
Net-zero emissions by 2050 Daikin Industries A/C manufacturing Japan
30% emissions reduction by 2030 Nippon Steel Steel manufacturing Japan
30% reduction in GHG emissions intensity Toray Industries Textile manufacturing Japan
30% reduction of scope 1 and 2
15% reduction of scope 3 by 2030
Phillips 66 Oil and gas refining U.S.

Learn about accomplishments.

Video

The value of engagement

The value of engagement

As a long-term investor, CalSTRS engages companies to align their policies and business practices with the changing world around us. This short, animated video explains how engagement improves corporate sustainability and creates long-term value for CalSTRS members.

Post

Resources