In Follow-Up to Investor Summit on Climate Risk, California Treasurer Launches Environmental Disclosure and Investment Initiative
California State Treasurer Phil Angelides today launched a landmark initiative to use CA pension funds' clout and considerable assets to demand more disclosure of climate- and other environmental risks from portfolio companies and invest in clean energy technologies to encourage job creation and economic growth in California. He cited the Ceres-led Investor Summit on Climate Risk, held at the United Nations in November, 2003, as part of the impetus for the announcement.
"Ceres has been a leader in drawing investors' and companies' attention to the financial risks of environmental degradation, and to the economic opportunites in solving those problems ," said Treasurer Angelides. "The Investor Summit on Climate Risk brought major investor clout together to examine the risks of climate change to our portfolios - risks that many corporations we invest in have chosen to ignore- and to discuss solutions"
He added: "That day in November, I joined my colleagues in a Call to Action to expose and mitigate climate risk. Today I am offering California's action plan to reduce climate risk and other environmental risk while creating economic opportunity, and I invite other major investors to work with us."
At the Investor Summit, which was attended by the heads of the California Public Employees Retirement System (CalPERS) and the California State Teachers' Retirement System (CalSTRS), Treasurer Angelides joined eight other major investors in issuing a Call to Action to mitigate the risks to pension funds associated with climate change. Today's announcement represents the first of investor plans to pursue items in the Call to Action.
Ceres Executive Director Mindy Lubber, applauded Treasurer Angelides' leadership. " This is a visionary set of concrete actions that investors can take to protect their portiolios from the financial risks of environmental issues such as climate change. Analyzing and disclosing that risk is the first step to building a long term portfolio that will yield financial and sustainable dividends."
"This is exactly the kind of plan that we were hoping to see emerge from the Summit. Treasurer Angelides has the vision to see the enormous financial risks for companies who have an impact on climate change and the profitable solutions that come from businesses focused on solving the problems. This plan confirms that responsible and profitable investing is a long term proposition and that it is no longer responsible to live by Wall Street's short- term expectations."
The Treasurer's initiative calls on CalPERS and CalSTRS - the nation's largest and third largest public pension funds, with combined assets of $250 billion - to implement the following four- pronged plan:
Demand Environmental Accountability and Disclosure.
Using their financial clout in the marketplace, and building on their track record of corporate governance leadership, CalPERS and CalSTRS would prod corporations to provide meaningful, consistent and robust reporting of their environmental practices, risks and potential liabilities - citing "critical financial factors" such as climate risk assessment and global warming. The California funds will join with other major U.S. investment funds in pressing the Securities and Exchange Commission to strengthen environmental disclosure rules, among other actions.
Target Private Investment in Environmental Technologies.
The Treasurer will urge CalPERS and CalSTRS to invest a combined $500 million in private equity investments, venture capital, and project financing to develop "clean" technologies to provide the pension funds with positive, long-term returns, and create jobs and economic growth in California in the years ahead.
Invest in Stocks of Environmentally Responsible Companies.
Urge CalPERS and CalSTRS to invest a combined $1 billion of their stock portfolios into environmentally screened funds through leading active public equity investment managers with proven track records.
Audit real estate portfolios to boost long-term value. Call on CalPERS and CalSTRS to undertake a comprehensive audit of their respective real estate investments to determine whether the investments are maximizing their opportunities to use clean energy, energy efficiency and green building standards and practices that reduce long-term costs and boost long-term value. CalPERS and CalSTRS have nearly $16 billion invested in real estate and property in California, the nation and 22 countries throughout the world. CalPERS and CalSTRS own nearly 160 million square feet of office and industrial space alone.
Both pension funds plan to meet on the initiative in the early Spring.
In crafting the new initiative, Angelides said he was also building on the lessons learned from the recent wave of corporate scandals. "There is a parallel between the corporate CEO who cooks the books to pump up the value of his company's stock while he is simultaneously looting the firm for his own gain," the Treasurer said, "and a corporation that increases its returns for a few quarters by exploiting the environment. The corporation that exploits the environment leaves behind both a damaged environment and, ultimately, a degraded company."
He cited environmental problems as an opportunity for new technology and job creation. "The environmental technology sector is expanding rapidly in response to the growing worldwide need for clean water, efficient energy sources, and other sustainable environmental solutions," the Treasurer said. "We need to move forward now, so California and our pension funds can capture this economic growth and create jobs, while at the same time clearing the air, land and water of pollutants through advanced solutions to our environmental challenges."