Securities: CalPERS Includes Social Activism in Its Investment Guide

The California Public Employees Retirement System will look at climate change issues and board diversity in making investment decisions. CalPERS has assets of $240 billion and is the nation's largest public pension fund. Its shear size creates significance in the marketplace for its investment guidelines.

CalPERS is instituting the environmental guidelines to encourage companies to disclose climate risk, such as carbon emissions, and to act on these risks. The fund believes that these unknown and unaddressed climate risks may diminish investment returns.

The fund is adopting corporate board diversity provisions to use as one factor in analyzing and assessing corporate board nominations. CalPERS is undertaking the diversity initiative because it wants the boards of companies in which it invests to better reflect the complexity and diversity of the global economy. It prefers that the directors of the companies reflect the experience and perspectives of players in the growing international economy.

For a more in depth analysis of the CalPERS guidelines on climate and diversity, please see Securities Litigation & Regulation, "CalPERS Investment Guide Addresses Climate, Diversity," p. 6, June 3, 2008.