CalPERS has started a $500 million internally managed strategy for investing in environmentally friendly global public companies, the system announced Wednesday.
Rob Feckner, board president of the $220.1 billion California Public Employees' Retirement System, Sacramento, said in a news release the investment would target companies that work to improve the environment and mitigate the adverse impact of climate change.
“Until now, we've invested in external managers whose funds screen out the worst offending public companies,” Mr. Feckner said in the release. “But this more robust, quantitative strategy will allow us on a large scale to support and become more directly involved in positive change by top performers that have improved share value and also done good for the environment.”
Investment staff will model the new index strategy after HSBC's Global Climate Change Benchmark index, said CalPERS spokesman Clark McKinley in an interview.
Mr. Feckner said companies in the new portfolio must derive a material portion of their revenues from low-carbon energy production.
George Diehr, chairman of CalPERS' investment committee, said in the release that research shows that a positive inclusionary methodology for investing in common-stock companies is more successful than a negative exclusionary approach.
CalPERS has around $400 million invested in four funds that use the negative exclusionary approach and the four funds have all had negative performance since the program began in 2004, CalPERS data show.