CalSTRS welcomes progress on methane emissions disclosures
The California State Teachers’ Retirement System (CalSTRS), the world’s largest educator-only pension fund said that “significant progress” had been made on methane emissions disclosures during this year’s proxy season
The fund, which manages $341.4bn said it has prioritised climate risk disclosures during the 2024 proxy season, casting votes against the boards of directors at a record 2,258 companies, surpassing the 2,035 companies in 2023.
It expects all companies it invests with to publish a sustainability report aligning with the International Financial Reporting Standards and to disclose Scope 1 and Scope 2 greenhouse gas (GHG) emissions.
Furthermore, CalSTRS expects the highest global emitters, particularly those on the Climate Action 100+ focus list, to set targets to reduce GHG emissions, aiming for a net-zero portfolio by 2050 or sooner.
"We need consistent, accurate, and comparable data from all companies in our portfolio to mitigate risk and accurately measure and reduce emissions,” said Aeisha Mastagni, a senior portfolio manager at CalSTRS. “We will continue to hold companies accountable for climate-related disclosures to protect the Teachers’ Retirement Fund on behalf of our members and their beneficiaries.”
Despite varying levels of climate data disclosure, there was significant progress in methane emissions reporting. Methane, being 80 times more potent than carbon dioxide, has been a focal point for CalSTRS. The fund continues to urge eligible companies to join the Oil and Gas Methane Partnership 2.0 (OGMP 2.0), a UN-led framework for measuring, reporting, and mitigating methane emissions.
Addressing methane emissions is seen as one of the most cost-effective and immediate methods to combat climate change. According to the International Energy Agency, 30% of methane emissions from fossil fuel operations can be abated with no net cost.
CalSTRS said that as a result of the engagements it has led, 10 companies, including ExxonMobil, Chevron, Harbour Energy, OMV A.G., and Vital Energy, have joined OGMP 2.0. Additionally, several companies in the exploration and production industry have become members through mergers with existing OGMP 2.0 participants.
“We’re encouraged by the increase in action toward methane emissions reduction and the new members joining OGMP 2.0,” said Mastagni. “Methane has a massive impact, and its mitigation is one of the more efficient ways to limit the impact of greenhouse gases worldwide.”
But research by the non-profit Environmental Defense Fund (EDF) reveals that US oil and gas producers need to cut back on their methane emissions by more than 80% in order to meet the 2030 targets set by the Oil and Gas Climate Initiative.
The uptake in methane reporting will also have been accelerated by regulatory pressures as the US Environmental Protection Agency is introducing new methane rules. Moreover, the EU has also adopted methane reporting rules earlier this year.
