CalPERS allocates $500M for environmental investments

The California Public Employees' Retirement System has earmarked $500 million for investments to improve the environment and to lessen impacts of climate change.

The nation's largest public pension fund will manage the new global fund internally.

"Until now, we've invested in external managers whose funds screen out the worst-offending public companies," said Rob Feckner, CalPERS board president, in a release. "But this more robust, quantitative strategy will allow us on a large scale to support and become more directly involved in positive change by top performers that have improved share value and also done good for the environment."

The CalPERS team will model its investment management strategy after the HSBC Global Climate Change Benchmark Index. That index has 380 securities in 36 countries. To make that index, the companies have to derive a significant part of their revenue from energy storage, low-carbon energy production such as wind, solar, biofuels and other alternative energies. Or they must be heavily involved with water, waste and pollution control, energy efficiency and management. The companies can also be involved in carbon trading.

"This new index has kept pace with non-environmental investments in recent years, and has outperformed our external environmental managers who have focused solely on excluding polluting companies from their portfolios," said George Diehr, chairman of CalPERS' investment committee.

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