California Public Employees Retirement System (CalPERS)

In terms of its approach towards impact management, California Public Employees Retirement System (CalPERS) acknowledges that its financing activities have both positive and negative impacts. CalPERS has an engagement policy where it describes its approach on sustainability themes and impact topics with clients and investees. The engagement policy includes a clear framework with success criteria and escalation points in the event that engagement with clients is unsuccessful. In addition, CalPERS publishes case studies describing where it has engaged both successfully and unsuccessfully with clients on sustainability themes and impact topics. CalPERS has a gender-balanced board of directors where 6 out of 10 members are women.

As a member of Net Zero Asset Owner Alliance, the pension fund has set a target of net-zero financed emissions by 2050 and disclose its financed emissions with underlying data quality and coverage of its financed emissions. It discloses key companies it has identified as priorities to engage with on climate change and that alignment with the Paris Agreement is one of its engagement topics. As a member of Climate Action 100+, the pension fund discloses that it collectively engages with its clients on the topic of climate change.

CalPERS discloses the proportion of women in its total direct operations workforce for each employee category. The financial institution has a grievance mechanism accessible to all workers, external individuals and communities to raise human rights complaints or concerns.

In terms of its approach to senior leadership accountability, CalPERS has an opportunity to link the remuneration of its executive or management teams to sustainability performance criteria. The bank also could reach at least 40% female representation in the board and in senior leadership positions. Additionally, while the bank monitors its pay gap, there is no evidence that it takes action to address it.

CalPERS could disclose interim emissions reduction targets at the group level, such as a 45% reduction in financed emissions by 2030. No evidence was found regarding the financial institution’s approach to fossil fuels that spans across the fossil fuel value chain, such as the amount or share of finance it directs towards fuels, or its stance on financing companies with new fossil fuel projects. Regarding nature and biodiversity, no evidence was found that the financial institution is committed to minimising its negative impacts or financing regenerative solutions.

There is no evidence that CalPERS has a publicly available policy statement committing it to respect human rights laid out in the UN Guiding Principles and the ILO declaration on fundamental rights at work. It has an opportunity to describe a comprehensive process for identifying its human rights risks and impacts across all its activities, especially its financing activities. To provide transparency on financial inclusivity, the financial institution has an opportunity to disclose the amount of finance directed towards, for example, women-owned businesses, small- and medium-sized enterprises (SMEs) or low-income developing countries.