The California Public Employees’ Retirement System (CalPERS), the largest public pension fund in the U.S. with a $235 billion investment porfolio, released its first report on its efforts to invest sustainably.
The report was released at the Ceres Conference in Boston this week. Ceres is a coalition of investors and environmentalists working together to integrate sustainability into the capital markets. CalPERS helped found Ceres in 1989.
CalPERS has been a pioneer in sustainable investing and played a critical role in attracting institutional investors to the practice of including environment, social and financial considerations in investment decisions.
The report, Towards Sustainable Investment: Taking Responsibility, outlines CalPERS’ journey to create a fiduciary framework that integrates sustainability across its investment portfolio and how it helps achieve long-term risk adjusted returns for its 1.6 million members and their families.
“We have been engaging directly with companies on environmental, social and governance issues for many years and are founding members of global networks such as the United Nations-backed Principles for Responsible Investment,” says Anne Stausboll, CalPERS CEO.
Among its many shareholder actions influencing a wide range of corporations on environmental and social issues, climate change is one of the most important.
“Environmental issues, and climate change in particular, pose a set of enormous risks and opportunities for CalPERS. Climate change has an increasingly large influence on the energy and water strategies used by our portfolio companies, making it an important fiduciary consideration in our investment process,” the report says.
CalPERS has invested $1.2 billion in capital in private equity funds – including its own CalPERS Clean Energy and Environmental Technology Funds – that support development of renewable energy companies.
They allocated $500 million to invest in 380 publicly traded companies around the world that derive a material portion of revenue in areas such as low-carbon energy production, energy efficiency management and carbon-trading.
They also invest 1% of their total in well managed forests, about $2.3 billion, in the US and the world.
They are also big investors in real estate and have reduced energy consumption across the portfolio 22.8% since 2004.