CalSTRS is creating an energy transition tracker — the first among asset owners — as the nation's second-largest pension plan pursues its net-zero strategy.
The goal of the California State Teachers' Retirement System, West Sacramento, is to cut its $311.7 billion portfolio's carbon emissions by 50% by 2030.
But CalSTRS' net-zero plan will "only work if the world moves in the same direction," said Kirsty Jenkinson, investment director of sustainable investment and stewardship strategies at CalSTRS, at the investment committee's Aug. 31 meeting.
The tracker, when it is fully developed, will be part of CalSTRS' net-zero investment decision-making process, said Scott Chan, deputy chief investment officer, at the same meeting.
The transition tracker will measure how the rest of the world is doing in cutting its carbon footprint, looking at such things as changes in the world's energy sources, methods of transportation, building materials used, and integrating that information into its funding plan and asset-liability study.
If CalSTRS gets too far out ahead or too far behind the rest of the world, it could impact its portfolio by introducing risk, Mr. Chan said.
The transition tracker will not only help CalSTRS but any asset owner that is focused on "real economy reductions in carbon emissions," said a memo to the committee by Meketa Investment Group Inc., CalSTRS' general investment consultant.
"Chris (CIO Christopher Ailman) and I want to set the standard in the industry," Mr. Chan said.