CalPERS Adopts 5-Year ESG Plan; Aims for Private Equity Transparency

The CalPERS board this week adopted a 5-year Environmental, Social and Governance (ESG) Strategic Plan, which includes points on private equity reporting, sustainable investment research and board diversity of companies in which CalPERS is a shareholder.

Read the document here.

On the private equity front, the plan aims to eventually have all of CalPERS’ PE managers complete the fee template designed last year by the Institutional Limited Partners Association (ILPA). It’s unclear whether all of the general partners will sign onto that initiative; anyhow, they have 20 years to make up their minds.

More on the 5-year plan, from PlanSponsor:

The plan identifies six strategic initiatives that will direct staff’s work. The initiatives are data and corporate reporting standards; UN PRI Montreal Pledge company engagement; diversity and inclusion; manager expectations; sustainable investment research; and private equity fee and profit sharing transparency. These initiatives are cross-cutting issues which will have impacts on risk and return. Each initiative has specific objectives, key performance indicators, and a timeline.

The comprehensive plan is a result of more than a year’s worth of review by staff and the CalPERS Investment Committee. During this time, staff presented a thorough review of each channel—environmental, social and governance. Staff also reported on how each channel could use the approach of integration, engagement, advocacy and partnerships to move the strategy forward.

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The strategic plan serves as the framework by which CalPERS executes its shareowner proxy voting responsibilities; engages public companies to achieve long-term, sustainable risk-adjusted returns; and works with internal and external investment managers to ensure their practices align with CalPERS’ Investment Beliefs.

The key performance indicators will serve as benchmarks to measure the success of efforts for each initiative. Staff will report to the board the status of the key performance indicators on a quarterly basis.