The $152.9 billion California State Teachers Retirement System (CalSTRS) announced that it would be taking “significant step” in its already broad sustainable investing program. From now on, all performance-related discussions with its external managers will include an analysis of how environmental, social, and governance (ESG) issues factor into their strategies.
"No matter what you’re doing with us, there are ESG risks that we think will have a long-term impact on the portfolio, and we want to be sure that you’re articulating for us how you’re looking at them,” said Jack Ehnes, CEO of CalSTRS .
Likewise for the California State Employees Retirement System (CalPERS), the nation’s largest public pension fund with $236 billion under management. CalPERS’ CEO, Anne Stausboll, pledged that the behemoth pension plan would fully integrate ESG factors in all investment decisions, and across all asset classes.
As goes CalPERS, so goes the industry? Perhaps. As one of the world's most sophisticated investors, CalPERS has consistently led the industry in adopting what ultimately become more standard portfolio elements. New vehicles can't just "do good for society", but must meet strict return projections to keep their plans solvent into the next century.
Investing for the next century? Perhaps this is why CalPERS is so concerned about ESG risks.
Read more at Ceres.org
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