PARIS (Reuters) - The California Public Employees Retirement System, the largest public pension fund in the United States, will begin engaging more companies in its portfolio on climate change, its head of governance said on Friday.
The move follows a study CalPERS completed this year on its $300 billion portfolio’s carbon footprint, which included a breakdown of the companies contributing the most emissions.
“This study means that we can be laser-focused on where we take our engagement,” CalPERS’ Investment Director of Global Governance Anne Simpson said on the sidelines of the Paris climate conference.
“We want the underlying companies in our portfolio to be aligned with the transition to a low-carbon economy.”
CalPERS has already pushed environmental and social governance measures at energy companies in which it invests, including Exxon Mobil, but Simpson said the pension fund also would begin targeting other carbon-intensive industries.
She said the study revealed that fewer than 100 companies in the fund’s enormous portfolio were responsible for half of its carbon dioxide emissions, including in the sectors of construction and materials, basic resources, travel and leisure, chemicals, and food and beverages.
“I think what we will do next is share this analysis with the funds that we work with and see the potential for a globally coordinated engagement plan, and not just in the oil and gas industry,” Simpson said. “Focusing on big oil and old coal will not get us there.”
CalPERS has resisted calls by climate activists to divest its fossil fuel stocks - as several other pension funds have done - saying it believes it can have more of an impact by retaining ownership and pushing companies to transform their businesses.
“To hop in and out of stocks to make a moral gesture or look good is really not the point of this,” Simpson said.
A recently passed California law, however, may force CalPERS to divest some thermal coal companies that have not committed to “reorientate their business to a low-carbon economy,” she said.
As of June, CalPERS had $57 million invested in 27 thermal coal companies. Simpson said CalPERS’ board would decide in July which of the companies it would keep and which it would sell, based on the requirements of the law.
Reporting by Richard Valdmanis; Editing by Dan Grebler