Updated with corrections
Asset owners are collaborating on corporate governance issues, giving them clout and the ability to make changes in the public companies in their portfolios.
CalPERS officials are seeing a noticeable increase in asset owners supporting each other on certain proxy issues such as climate change as well as diversity, equity and inclusion. Some of these initiatives are starting to pass and companies are beginning to take notice, they say.
One of the biggest wins was a big push by an investor group led by $473.4 billion California Public Employees' Retirement System, Sacramento, the $306.7 billion California State Teachers' Retirement System, West Sacramento, the $254.8 billion New York State Common Retirement Fund, Albany, and hedge fund Engine No. 1 that replaced three directors on Exxon Mobil Corp.'s board of directors.
Another successful joint effort involved a shareholder campaign at Toshiba Corp., Tokyo. Earlier this year, CalPERS, CalSTRS and the Florida State Board of Administration, Tallahassee, which oversees a total of $245.8 billion including the $193.2 billion Florida Retirement System, joined in support of hedge fund Effissimo Capital Management Pte. Ltd.'s successful proposal to conduct an independent investigation of the 2020 annual general meeting. Effissimo contended that an earlier internal investigation by Toshiba's audit committee "was inadequate and inherently conflicted" because committee members were investigating allegations of misconduct directly connected with their own election as directors, a news release said. In June, shareholders including CalSTRS also ousted Toshiba Chairman Osamu Nagayama.
"The vote at Exxon Mobil shows investors have the power in their hand to effect changes at public companies," said Simiso Nzima, CalPERS' investment director, global equity, and head of corporate governance, in an interview. "The real question is whether this is a one-time event or whether investors will, going forward, exercise that power. My hope is that there is an awakening."
But, he added that time will tell whether this is a "watershed moment."