Climate change, water scarcity and quality, income inequality and disruptive technologies are high on the agenda for the California Public Employees' Retirement System, Sacramento.
Beth Richtman, managing investment director of CalPERS' sustainable investment program, said the $358.9 billion pension fund is bolstering its research efforts around these themes to better identify risks and opportunities.
One way CalPERS is already addressing the issue of climate change is through its involvement in Climate Action 100 Plus — a coalition of investors committed to engaging with the world's top greenhouse gas emitters. Anne Simpson, CalPERS' investor director for its sustainable investments program, chairs the Climate Action 100 Plus initiative.
Also, within its real estate portfolio, the pension fund has been working on finding "economically attractive ways" to reduce the energy use and carbon footprint of its holdings, Ms. Richtman said.
"To date, energy optimization opportunities expected to generate over $34 million of net present value and save over 18 million kilowatt hours of energy annually have already been identified and are in various stages of implementation," Ms. Richtman said in a follow-up email.
A couple of months ago, the pension fund launched research projects around water scarcity and quality, and the impacts of disruptive technologies, including the social impacts of job evolution, Ms. Richtman added.
Staffers from all the fund's investment areas are involved in the research, which will hopefully provide them with investment insights, she said.
"Inequality in our economy" is another area of research focus for CalPERS, she said.
"Previously CalPERS had approached this with a survey of academic literature, but right now we're doing sort of a wider listen to what type of research and knowledge is available, and talking to a lot of experts in this space. Ultimately, we will be analyzing what this means to us as an investor," Ms. Richtman said. Findings could be presented to the board in 2019.
Additionally, the pension fund is "taking a step back to look at the wide array of human capital issues (the fund) could be addressing, and trying to assess their potential for impact" on the fund, Ms. Richtman said.
Product safety, for instance, was incorporated into the pension fund's governance and sustainability principles in June. CalPERS also recently added a principle on corporate culture that said boards should, among other things, provide "a workplace free of sexual harassment."
These principles help guide the pension fund's engagement and advocacy agendas and expectations for managers.
