San Francisco City & County Employees' Retirement System plans to make its total portfolio net-zero carbon emissions by 2050.
The $27.2 billion pension fund's board Wednesday approved the new statement of ambition to be aligned with the 2015 Paris agreement's goal of limiting global warming by 1.5 degrees Celsius, which requires global carbon emissions to reach net zero by 2050.
"This is an ambitious but necessary step in acknowledging, evaluating, and taking steps to manage the investment risks from climate change," said Andrew Collins, director of ESG investing, in a news release. "SFERS looks forward to collaborating with peers across the institutional investment industry to continue to further collective understanding of the wide-reaching implications of the transition to a low-carbon economy."
According to board meeting materials, the structure of the plan will follow the same framework as the pension fund's overall ESG platform, through active ownership (engaging with companies on strategy and filing and supporting other shareholder proposals related to climate risk), ESG investment management, and ESG collaboration and communication.
The decision to create the net-zero goal was driven by increasing investment-related climate risks, so it "is consistent with fiduciary responsibilities to expand SFERS' climate strategy to include a planwide approach," the materials say.
According to the materials, the pension fund's public equities portfolio has holdings representing 22.4% less carbon emissions than its benchmark, the MSCI ACWI IMI index, seeing as the portfolio is already underweight to energy, materials and utilities and overweight to health care and technology.