CalSTRS confirms manager for $450m sustainable equity mandate
The California State Teachers’ Retirement System (CalSTRS), the second-largest pension fund in the US, has appointed Nordea Asset Management (NAM) to manage a sustainability-focused $450m global equity mandate.
The $341bn Sacramento-based pension fund has selected Nordea’s Global Stars Equity Strategy to manage the investments. These investments come from CalSTRS’ Sustainable Investment and Stewardship Strategies (SISS) portfolio, which accounts for around 3% of the pension fund’s portfolio and invests in both public and private markets.
According to NAM, investments in the Global Stars Equity Strategy incorporate environmental, social and governance risk factors, with the mandate aligned to net zero. The strategy offers investors an immediate reduction in carbon emissions relative to a benchmark investment, with its current carbon footprint 61% below the MSCI ACWI benchmark, the manager explained.
Kirsty Jenkinson, investment director at CalSTRS, said: “The sustainability-focused approach of the Global Stars Equity Strategy aligns closely with the mandate of the SISS portfolio. Additionally, Nordea has been a valuable partner in our stewardship efforts focused on meeting our pledge to achieve a net zero portfolio by 2050 or sooner.”
The portion of assets CalSTRS has committed to the SISS portfolio is set to grow to 5% of the pension fund, expanding to incorporate more sustainable private market investments.
In March, Jenkinson told Net Zero Investor that 1% of the fund, which I around $3bn, has been allocated to invest solely in climate solutions offered on the unlisted markets. So far, CalSTRS has committed $2bn of this total allocation.
CalSTRS’ allocation to NAM’s equity strategy comes as the pension fund partnered with the manager on an engagement initiative aimed at encouraging investee companies to join the Oil and Gas Methane 2.0 Partnership (OGMP), a framework to reduce global methane emissions.
Members of the partnership commit to setting methane emissions targets in line with a 45% reduction by 2025 and 60-75% by 2030.
