CalSTRS on Wednesday adopted a 20% suballocation to the MSCI ACWI Low Carbon Target index within its public equity allocation.
The new allocation is designed to align with the $311.7 billion California State Teachers' Retirement System's net-zero pledge to reduce its emissions by 50% by 2030. CalSTRS staff recommended the allocation after concluding that the investment could reduce portfolio emissions while adding minimal risk to the portfolio.
CIO Christopher Ailman said that the board could be asked to increase the allocation to the low-carbon index over time.
As of June 30, CalSTRS had 38.4% invested in global stocks, with a 43% public equity target. The new suballocation would equal a target of nearly $27 billion invested in the low-carbon index strategy.
As of June 30, CalSTRS had $3.9 billion invested in the MSCI ACWI Low Carbon Target index as part of its sustainable investment and stewardship strategies public portfolio. The $3.9 billion investment represented 44% of the SISS public portfolio and approximately 3% of CalSTRS' total public equity exposure, according to a staff report. Staff will develop an implementation plan for a future investment committee meeting.
