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CalPERS invests $500 million in new environmentally-conscious strategy

Date: Wednesday, November 24, 2010
Author: HedgeTracker

The California Public Employees’ Retirement System (CalPERS), the largest public pension fund in the United States, recently put $500 million into a strategy that invests in environmentally-focused global public companies. The new internally-managed strategy will be modeled after HSBC’s Global Climate Change Benchmark Index (HSBC CCI). According to CalPERS, “companies must derive a material portion of their revenues from low-carbon energy production,” including alternative energies, water conservation and control, energy efficiency, and carbon trading, in order to be included in the portfolio.

“Until now, we’ve invested in external managers whose funds screen out the worst offending public companies,” commented CalPERS Board President Rob Feckner. “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.”

So although CalPERS has focused on restricting its investments in companies with negative environmental impacts in the past, their new environmental investment strategy takes a different approach. “Research shows that a positive inclusionary methodology for investing in common stock companies is more successful than a negative exclusionary approach that uses subjective rather than quantitative selection criteria,” stated George Diehr, Chair of the CalPERS Investment Committee.

CalPERS manages the retirement benefits for over 1.6 million California public employees and their families. The pension fund oversees $219 billion in assets under management.