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California
State Treasurer Phil Angelides launched a landmark initiative in
February to use California pension funds’ clout and considerable
assets to demand more disclosure of climate change and other environmental
risks from portfolio companies and invest in clean energy technologies
to encourage job creation and economic growth in the state. He cited
the CERES-led Investor Summit on Climate Risk, held at the United
Nations in November 2003, as part of the impetus for the announcement.
At the Investor Summit, which was attended by the heads of the California
Public Employees Retirement System (CalPERS) and the California
State Teachers’ Retirement System (CalSTRS), Angelides joined
eight other major investors in issuing a Call to Action to mitigate
the risks to pension funds associated with climate change. This
represents the first of investor plans to pursue items in the Call
to Action.
“This is exactly the kind of plan that we were hoping to see
emerge from the Summit,” said CERES executive director Mindy
Lubber. “Treasurer Angelides has the vision to see the enormous
financial risks for companies who have an impact on climate change
and the profitable solutions that come from businesses focused on
solving the problems. This plan confirms that responsible and profitable
investing is a long-term proposition and that it is no longer responsible
to live by Wall Street’s short-term expectations.” The
treasurer’s initiative calls on CalPERS and CalSTRS—the
nation’s largest and third-largest public pension funds, with
combined assets of $250 billion—to implement the following
four-pronged plan:
* Demand Environmental Accountability and
Disclosure.
Using their financial clout in the marketplace, and building on
their track record of corporate governance leadership, CalPERS and
CalSTRS would prod corporations to provide meaningful, consistent
and robust reporting of their environmental practices, risks and
potential liabilities—citing “critical financial factors”
such as climate risk assessment and global warming. The California
funds will join with other major U.S. investment funds in pressing
the Securities and Exchange Commission to strengthen environmental
disclosure rules, among other actions.
* Target Private Investment in Environmental Technologies.
The treasurer will urge CalPERS and CalSTRS to invest a combined
$500 million in private equity investments, venture capital and
project financing to develop “clean” technologies to provide
the pension funds with positive, long-term returns, and create jobs
and economic growth in California in the years ahead.
* Invest in Stocks of Environmentally Responsible
Companies.
Urge CalPERS and CalSTRS to invest a combined $1 billion of their
stock portfolios into environmentally screened funds through leading
active public equity investment managers with proven track records.
* Audit Real Estate Portfolios to Boost Long-Term Value.
Call on CalPERS and CalSTRS to undertake a comprehensive audit of
their respective real estate investments to determine whether the
investments are maximizing their opportunities to use clean energy,
energy efficiency and green building standards and practices that
reduce long-term costs and boost long-term value. CalPERS and CalSTRS
have nearly $16 billion invested in real estate and property in
California, the nation and 22 countries throughout the world. CalPERS
and CalSTRS own nearly 160 million square feet of office and industrial
space alone.
In crafting the new initiative, Angelides said he was also building
on the lessons learned from the recent wave of corporate scandals.
“There is a parallel between the corporate CEO who cooks the
books to pump up the value of his company’s stock while he
is simultaneously looting the firm for his own gain,” the treasurer
said, “and a corporation that increases its returns for a few
quarters by exploiting the environment. The corporation that exploits
the environment leaves behind both a damaged environment and, ultimately,
a degraded company.”
He cited environmental problems as an opportunity for new technology
and job creation. “The environmental technology sector is expanding
rapidly in response to the growing worldwide need for clean water,
efficient energy sources and other sustainable environmental solutions,”
Angelides commented. “We need to move forward now, so California
and our pension funds can capture this economic growth and create
jobs, while at the same time clearing the air, land and water of
pollutants through advanced solutions to our environmental challenges.”
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