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Sustainable investing

The Teachers’ Retirement Board is charged with maintaining a strong, stable fund in order to pay benefits to CalSTRS members and their survivors. To fulfill that responsibility, the board understands the CalSTRS portfolio as the foundation of our members’ retirement security and that good corporate governance is essential to the safety of the portfolio.

All activities of the Sustainable Investment and Stewardship Strategies program are guided by the CalSTRS Corporate Governance Principles. The principles not only lay the foundation of our proxy voting activities but all of the activities including corporate engagements and market-wide governance initiatives.

As a large and long-term investor, CalSTRS is in a position to exert influence on the corporations in which it has invested. CalSTRS appreciates and, with prudence and care, uses its opportunity to vote on decisions affecting the guidance and well-being of those investments.

Proxy voting 

As a long-term asset owner, CalSTRS believes that corporate directors work on behalf of share owners and that the ability to change our representatives in the boardroom is fundamental to shareholder democracy.

CalSTRS actively votes its proxies to support corporate board members and resolutions which align with our interests and philosophy.

See CalSTRS' proxy voting record

Executive compensation 

CalSTRS has been vigorously engaged in corporate governance issues for more than 20 years and executive compensation remains a centerpiece of that effort.

CalSTRS believes that a thorough review of pay practices is an important fiduciary duty for both boards of directors of corporations and institutional investors.

Our principles for executive compensation are based on a philosophy that:

  • Promotes alignment of interests between management and shareholders.
  • Promotes and creates long-term value.
  • Is flexible enough to address changing market conditions.
Board diversity 

CalSTRS has long focused on corporate accountability and improving long-term returns in its portfolio. Board diversity is an essential tool in the goals to improve corporate accountability and enhance long-term sustainable value shareholders, generally and CalSTRS beneficiaries in particular.

CalSTRS supports board diversity as an important business goal that can be properly addressed in the marketplace. The following resources are for your convenience; this list is not intended to be definitive or conclusive.

Read the Diversity in the Management of Investments: Annual Progress Report

Mind the Gap

Mind the Gap is a review of empirical findings and Glass Lewis’ research on gender diversity in 11 different markets.

This report covers issues such as:

  • Existing and upcoming legislation and guidance on diversity considerations and quotas.
  • Findings regarding female representation in the boardroom, on key committees and in various sectors.

For more information or to obtain this report, complete the Request Information form at Glass, Lewis & Company’s website. Mention this report in the “Comments” section.

Sustainability risk management 

CalSTRS recognizes that environmental, social and governance (ESG) issues, also known collectively as sustainability issues, affect the performance of the investment portfolio to varying degrees across companies, sectors, regions and asset classes. The CalSTRS Corporate Governance Unit engages corporations, regulators, policy makers, and fellow investors on a variety of sustainability issues with the goal of increasing the level of awareness and importance that the global investment community places on sustainability considerations.

The CalSTRS Corporate Governance Unit also leads the Green Initiative Task Force, which is an internally staffed team that incorporates all asset classes of the CalSTRS Investment Office. The mission of the Green Initiative Task Force is to manage the risks and capture the opportunities associated with climate change and other environmental issues by identifying environmentally focused investments and risk mitigation strategies intended to enhance the risk-adjusted returns of the overall CalSTRS portfolio.

Read the Green Initiative Task Force Annual Report

The CalSTRS Board has endorsed the Principles for Responsible Investment (PRI). As such, CalSTRS has incorporated the PRI and other ESG principles into its investment policies and practices. Along with the PRI, CalSTRS works closely with organizations such as the Carbon Disclosure Project (CDP) and Ceres to improve the transparency and disclosure of environmental risk data by corporations. For more information about these organizations please see the following resources.