Calif. pension fund vows to increase clean energy investments 150%, calls for price on carbon emissions

Source: Debra Kahn, E&E reporter • Posted: Monday, September 22, 2014

One of California’s largest pension funds last week said it would increase its holdings of clean energy and technology companies in a move aimed at lowering greenhouse gas emissions and encouraging global action on climate.

The California State Teachers’ Retirement System announced Friday that it would increase its investments in low-carbon generation and technologies to $3.7 billion within five years, up from $1.4 billion today. The investment could grow to several times that amount if a price on carbon is established, fund executives said.

CalSTRS, as it is known, is the world’s largest educator-only pension fund, with roughly $188 billion in investments. It provides pensions and other benefits to California’s 868,000 public school teachers and their families.

“Targeting the clean energy and technology sector represents a good investment opportunity because it positions CalSTRS for a low-carbon future,” said Chief Investment Officer Christopher Ailman. “If a meaningful price on carbon emissions is established, CalSTRS believes its clean energy and low-carbon investment could grow to almost $9.5 billion, nearly seven times the current level of investment.”

The pledge came ahead of this week’s U.N. Climate Summit in New York, which CalSTRS executives will be attending. Executives said they hoped the commitment would spur national and international policies that reduce the risks associated with climate change.

The move follows last week’s plea for carbon pricing mechanisms by nearly 350 institutional investors holding $24 trillion in assets (ClimateWire, Sept. 19).

“This is a significant commitment for a U.S. pension fund and a good example of investors not just asking for strong climate policies, but also shifting their capital to more promising low-carbon investment opportunities,” said Peyton Fleming, spokesman for Ceres, the nonprofit investor activist group to which CalSTRS belongs.

CalSTRS started exploring sustainable speculation in 2005 with a $225 million investment. In 2008, it adopted a policy to integrate environmental, social and governance considerations into its investment decisions. Among the factors it considers are whether businesses risk damaging the ecosystem, whether the environment could damage businesses and whether businesses are dependent on natural resources whose supply might be depleted.

The new investments will be in the fund’s public equity, private equity, fixed income and infrastructure portfolios and will be made as suitable options become available, CalSTRS said.