Saying no: CalSTRS votes against 2,000 boards over climate disclosures

The California State Teachers’ Retirement System (CalSTRS) moved against the boards of directors at more than 2,000 companies during the 2023 proxy season, as they failed to provide the pension fund’s expected level of climate risk disclosures.

CalSTRS expects companies within its portfolio to report their direct greenhouse gas (GHG) emissions (Scope 1), indirect emissions (Scope 2), and climate reports based on the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). 

These companies are also expected to curb, or at least have a credible plan for curbing, their greenhouse gas emissions.

CalSTRS voted against 2,035 boards of directors in a range of industries during the proxy season, including steel producers, transportation companies, and metal and mining companies.

Aeisha Mastagni, a portfolio manager on CalSTRS’ Sustainable Investment and Stewardship Strategies team, said: “We voted against boards that didn’t meet the most basic disclosure expectations.

“These public disclosures are an important step toward reaching net zero because companies cannot be held accountable for reducing their greenhouse gas emissions without them.”

In January this year, CalSTRS voted against the appointment of Shailesh Haribhakti as non-executive director at Indian firm Adani Total Gas, in April against Betty Sapp and Stuart Taylor to the board of US aerospace company Ball Corp, and in May against ten proposed appointments to the board of US commercial bank Trustco.

CalSTRS also welcomed the International Sustainability Standards Board’s (ISSB) first two sustainability-related disclosure standards. Released in June 2023, these standards will enter into effect in January 2024 and look to help establish consistency in company sustainability disclosures.

However, CalSTRS has also expressed opposition to proposed state legislation SB 252, which if enacted would force the pension fund, along with the California Public Employees' Retirement System (CalPERS), to divest from oil and gas holdings. Of SB 252, a spokesperson for CalSTRS said: “Divestment is a last resort action that can have a lasting negative impact on the health of the Teachers’ Retirement Fund, while also severely limiting our ability to shape corporate behaviour for long-term sustainable growth.”

CalSTRS is the world’s largest educator-only pension fund with more than $315 billion in assets.

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