The California Public Employees’ Retirement System (CalPERS) announced almost $10 billion in new actions aimed at investing in the global transition to a low-carbon economy, including new private market investments and a customized public equity index to enhance the pension fund’s climate-aware investing.

“The CalPERS Climate Action Plan is designed to take advantage of the rapid growth in climate transition investment opportunities, the kind of high-quality investments that are essential in paying the retirement benefits promised to our members and their families,” said CalPERS Chief Executive Officer Marcie Frost. “As we continue to measure the portfolio risks posed by climate change, our long-term strategy must also include providing some of the capital needed to finance the decarbonization of the global economy.”

The announcements represent important early steps toward implementing the sweeping climate investment plan presented last November to the CalPERS Board of Administration. The plan calls for investing $100 billion in climate solutions by the end of 2030, while instituting an enhanced accountability process for companies to disclose and strengthen their plans to navigate the energy transition.

The new actions, totaling more than $9.7 billion, include:

• A customized Climate Transition Index, committing $5 billion in public equity investments to a scalable alternative to capitalization-weighting. The index will evaluate both the risks and opportunities of the global energy transition.ource
• Nine signed commitments of more than $1.1 billion in private market investments in sectors supporting energy production and distribution as well as freight and supply chain optimization.
• Additional private market investments, currently under review, totaling $3.6 billion. Some of these investments are expected to be final in the coming weeks and months.

Investment officials will provide additional details on the Climate Action Plan during the CalPERS Board of Administration meeting on July 15.

“The CalPERS Climate Action Plan is designed to make our pension fund the global partner of choice in climate investing,” said Peter Cashion, managing investment director of the CalPERS Sustainable Investments Program. “To do that, we need a diverse set of investments and tools to generate the excess returns that are achievable during this historic transition to a low-carbon future.”

CalPERS also released a new video that expands on how the plan will work and its benefit to members’ retirement security.

CalPERS had approximately $47 billion in climate solutions at the inception of the plan in November 2023. By the end of 2030, that number will more than double, and the carbon intensity of the pension fund’s portfolio is expected to decrease by at least 50%.

Source: CalPERS