Recent Low-Carbon Transition Work Plan highlights
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 the CalSTRS Investment 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 CalSTRS statement on this development.
- Shareholder proposals (May 2021) – On May 12, 2021, a majority of Phillips 66 shareholders voted to pass the proposal submitted by CalSTRS asking the company to address concerns regarding corporate lobbying activities that are inconsistent with the Paris Agreement. Read more about 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 Pending Phillips 66* Oil and gas refining U.S.
*At the latest company annual general meeting in May 2021, shareholders approved two proposals: (1) asking the company to set emission reduction targets, (2) requesting the company issue a report on whether its lobbying activities are consistent with the goals of the Paris Climate Agreement.
Low-Carbon Transition Work Plan highlights
CalSTRS will capitalize on new investments that are additive to the total fund, with a focus on the intersection of climate change and positive financial drivers that support a low-carbon transition.
|Sustainable investment initiatives||Board priority||Progress||Upcoming activities|
|SISS Private Portfolio||Expand investments in low carbon solutions||Developing proposed structure and governance framework for SISS private portfolio||Request approval of SISS private portfolio by December 2020|
|Develop SISS pipeline||Expand investments in low carbon solutions||Initiated due diligence on more than 10 low-carbon related investment opportunities||Continue development and assessment of opportunities|
|Asset Class Partnerships||
||Identify existing relationships within CalSTRS private asset classes to leverage high-quality deal flow||Discuss investment opportunities with existing strategic partners|
CalSTRS has intensified its efforts to secure strong commitments from companies to reduce emissions and manage low-carbon transition risks.
|Engagement initiatives||Board priority||Progress||Upcoming activities|
|CalSTRS leads on eight Climate Action 100+ engagements||Assess “Transition Readiness” across asset class||Secured net zero commitments from:
||Monitor progress on net zero commitments, and secure commitments from Torray Industries, Nippon Steel and Phillips 66|
|Low Carbon Policy Advocacy||Assess “Transition Readiness” across asset class||
|Activist Stewardship||Assess “Transition Readiness” across asset class||Identified strategic opportunity for innovative activist stewardship methodology and campaign||Continued discussion with board|