A new global governance policy expected to be approved by the investment committee of the $296.6 billion California Public Employees’ Retirement System will subject CalPERS investments in emerging markets to tougher standards.
The investment committee will vote on the policy at its March 16 meeting.
Companies in which the Sacramento-based CalPERS invests will be required to show that they have an independent board of directors, fair labor practices, do not violate the rights of individuals and have a sustainability plan in place.
The new policy does not apply just to companies, but also countries, requiring open markets and political stability.
The new policy will also apply to CalPERS’ external money managers that invest in emerging markets companies.
It replaces the current policy, which while incorporating some of the same principles, gave investment staff and external managers more flexibility in how they would evaluate compliance with CalPERS rules. The new document would consolidate three existing policies that deal separately with global proxy voting, emerging markets equity principles and the nomination of company board directors.