Calstrs plans green turn after Joe Biden win

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The world’s largest public pension fund for teachers is planning to speed up changes in its investment portfolio in a bid to go greener after Joe Biden won the U.S. election.

Jack Ehnes, chief executive of the $ 254 billion California State Teachers’ Pension System, said Calstrs would speed up implementation of his green investment strategy after Donald Trump lost the ballot.

The Trump administration was engaged in a long legal battle with California, where Calstrs is based, to prevent the state from setting its own emission standards as part of efforts to fight climate change.

In contrast, Biden has pledged to join the Paris climate agreement, the international pact designed to try to avoid dangerous levels of global warming.

Mr Ehnes told the Financial Times: “It is clear that the outcome of the election was going to have an impact on our success with our strategy to transition to a low carbon economy. The policies of the Biden administration will likely offer a number of opportunities for investors with sustainable investment strategies. We will probably accelerate our path to low carbon. “

Calstrs has been pressured to walk away from its estimated $ 6 billion investments in fossil fuel companies by unions representing teachers, including the United Teachers of Los Angeles and the California Federation of Teachers, and by lobby groups such than Fossil Free California. The Faculty Association of California Community Colleges has also urged Calstrs to withdraw its money from fossil fuels.

“Continuing to hold investments in fossil fuel companies is reckless and inconsistent with Calstrs’ fiduciary duty,” Debbie Klein, president of the FACCC, wrote in a letter in September.

Mr Ehnes added that efforts to make progress on climate change faced obstacles with the Trump administration.

“There were attacks against some of the issuing policies that our state [California] was more progressive. US regulations and mandatory climate risk disclosure requirements have also lagged behind other countries, ”said Ehnes.

Calstrs, which serves nearly one million former and current public sector education workers, established a task force in 2019 to reduce climate-related risks in its portfolio, including by increasing its investments low carbon emission.

About $ 5.4 billion of the fund is invested in activist and sustainability-focused funds, with about $ 505 million invested in solar, wind and other renewable energy production and $ 286 million in bonds. green. Almost half of the fund, or $ 124 billion, is allocated to listed stocks.

Unlike a growing number of pension plans, Calstrs has not set a target to achieve net zero emissions for its investments.

IFM Investors, the asset manager owned by an Australian $ 148 billion pension fund, pledged in October to reduce greenhouse gas emissions across all its asset classes with a target of zero net by 2050.

Mr Ehnes said: “We have not made such a statement, but we certainly have ambition to achieve this goal.”

He added that he planned to put “a lot of money to work” in low-carbon investments.

“Increased electrification of vehicles, increased regulation of methane emissions and support for sustainable finance and infrastructure are just a few examples that could accelerate investment flows towards a low carbon economy,” he said. he declares.

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