California State Teachers' Retirement System, West Sacramento, plans to more than double its clean energy and technology investments — to $3.7 billion from $1.4 billion over the next five years.
In a statement issued Friday, officials of the $186.6 billion pension fund said clean energy investments could increase to $9.5 billion, but didn't provide a timetable to that expansion.
Brian Rice, CalSTRS portfolio manager, said the pension fund will look at increasing allocations to existing managers before deciding on searches for new ones. No time frame has been set for making a decision on searches, he said.
The increase in clean-related investments will come across all CalSTRS' asset classes, including equity, fixed income, private equity and infrastructure.
CalSTRS isn't disclosing the amount it expects to allocate to different asset classes and in specific clean- and low-carbon-related investments to avoid tipping its intentions to the market, Mr. Rice said.
Funding will come from reallocations and cash flow, he said.
Explaining the reason for the increase, Mr. Rice said CalSTRS officials want to position investments to capitalize on an expected transition to a clean-related economy.
Pension Consulting Alliance, a CalSTRS investment consultant, is assisting on the planned increase in investments, Mr. Rice said.
“CalSTRS has long supported the case for global action on climate change and is seeing a growing number of investment opportunities in low-carbon solutions, especially as renewable technology costs come down and regional clean energy policies take hold,” CEO Jack Ehnes said in the statement. “Strong new climate and clean energy policies are urgently needed at the national and international levels to facilitate scaling up investments in climate solutions. With this commitment, we hope to catalyze incentives for stronger, more comprehensive policies aimed at reducing the risks associated with climate change.”
The statement also said the move was deliberately made ahead of the Sept. 23 United Nations Climate Summit, in which CalSTRS will participate.
CalSTRS' current green allocation includes more than $500 million in private equity investments in solar and wind energy projects located principally in the United States and Europe, and almost $200 million in infrastructure investments in solar, wind and hydro energy generation and transmission assets located in countries such as Brazil, Chile and the United Kingdom.