CalPERS CEO Marcie Frost decried the politicization of environmental, governance and social investing at Wednesday's board meeting and highlighted the benefits of the $443.2 billion pension plan's ESG approach.
"In some cases, the (midterm election) campaign rhetoric not only dismissed the danger of climate change, it went so far as to mischaracterize a strategy we believe in strongly: examining the risk factors of the environment, of social inequality, and of good governance," Ms. Frost said. "The falsehoods about ESG risk analysis have been so widespread that I even heard them repeated during our Educational Forum"(in Anaheim, Calif., Nov. 1-3.
The result of the Sacramento-based California Public Employees' Retirement System's strategy is that it has reduced the carbon intensity of its global equity portfolio by more than 30% and its global fixed-income portfolio by more than 50% over the past seven years, she said, citing a climate report shared with the investment committee Monday.
CalPERS' ESG approach has also produced investment opportunities, including about $19 billion in global equity and around $1 billion of its corporate credit portfolio, she said. And roughly 51% of its infrastructure portfolio is invested in renewable energy, energy-efficient infrastructure, sustainability-certified and carbon-neutral assets, Ms. Frost said.
"But let's be clear: Applying the lens of ESG is not a mandate for how to invest. Nor is it an endorsement of a political position or ideology," she said. "Those who say otherwise are actually advocating for investors like CalPERS to put on blinders ... to ignore information and data that might otherwise help build on the retirement security of our 2 million members."
