CalSTRS announces plans to halve holdings in GHG emitters by 2030
The move is part of a plan that aims to mitigate the risk climate change poses to the teachers’ pension fund.
The board of the California State Teachers’ Retirement System (CalSTRS) has committed to a halving of greenhouse gas (GHG) emissions across its investment portfolio by 2030, as part of a package of "bold measures” tackling the risks posed by climate change.
CalSTERS goal is consistent with the latest findings of the UN’s Intergovernmental Panel on Climate Change (IPCC) and is an update on the target set by the board in September 2021, to achieve a net-zero investment portfolio by 2050.
The $311.7bn CalSTRS has eight years to achieve a 50% reduction in portfolio emission-intensity, without divesting from fossil fuel companies, given the board's opposition to divestment legislation earlier this year.
The new “total fund plan” approved by the board recognises the threats that climate change presents to all asset classes and sectors of the global economy.
“We need to escalate our work in reducing emissions, expand our investments in low-carbon solutions and use our influence to accelerate the global economy’s transition,” said the Teachers’ Retirement Board vice chair Sharon Hendricks.
“CalSTRS is taking bold measures to mitigate the risk climate change poses to our fund, while prioritising our plan to reach full funding by 2046 and fulfilling our promise to California’s teachers.”
The goal is one of four initial measures authorised by the board that aim to integrate the net-zero strategy across the pension fund’s portfolio, another of which is a target to allocate 20% of the public equity portfolio to a low-carbon index.
The Teachers’ Retirement Board is also implementing a systematic decision-making process, that will ensure GHG emissions are incorporated into investment decisions as part of traditional risk-and-return analyses and their potential impacts on the CalSTRS Funding Plan.
Board chair Harry Keiley said the measures “underscore our commitment to considering the impacts of climate change fully and systematically as we manage our fund on every level”.
CalSTRS declined to disclose further details on how it would execute this plan.
We need to escalate our work in reducing emissions, expand our investments in low-carbon solutions and use our influence to accelerate the global economy’s transition.”
Opposed to divestment
In March this year, the board voted to oppose Senate Bill 1173 (Gonzalez), which would have prohibited CalSTRS from making additional or new investments in fossil fuel companies and required divestment from such investments by 1 July 2027.
At the time, in its assessment of exposure to fossil fuels, CalSTRS revealed it invested in 174 companies with fossil fuel reserves for energy application and sales that account for more than 1% of revenue.
Among the holdings in its portfolio are Australian mining company Alumina, and Australian utility company AGL.
CalSTRS also invests in GAIL, India's state-owned gas explorer, which announced last month it is targeting net-zero emissions by 2040, including a 100% reduction in Scopes 1 and 2 emissions and a 35% reduction in Scope 3 emissions.
In its opposition to the Bill, the CalSTRS board cited the risk to teacher pension security.
At that time, Keiley said it could address climate change and ensure a secure retirement for California’s teachers, instead, through “relationships, coalitions and investments”.
