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AUM in Action

CalSTRS Gets Tough on Climate, Board Diversity

US pension fund the California State Teachers’ Retirement System (CalSTRS) has outlined its priorities this proxy season, noting it will be taking stronger action against corporates failing to demonstrate their commitment to addressing climate risks and board diversity. CalSTRS said it expects all portfolio companies to provide minimum disclosures that are aligned with the Task Force on Climate-related Financial Disclosures (TCFD), spanning Scope 1-2 emissions at a minimum. The pension fund said it will vote against directors of the largest global companies that fail to do so. “Our job as a fiduciary and long-term investor is to make sure the companies in our portfolios are planning appropriately for the future,” said Aeisha Mastagni, a Portfolio Manager on CalSTRS’ Sustainable Investment and Stewardship Strategies team. “Without important disclosures, investors cannot appropriately manage risks and advance our commitments to achieving a net zero emissions portfolio.” CalSTRS will also be evaluating the diversity of corporate boards of directors, as it believes companies with diverse leadership have better decision-making processes due to their variety of backgrounds and perspectives, which helps to drive positive economic outcomes. The fund will vote against an entire board of directors if it does not include at least one woman, and will vote against a board’s nominating and governance committee if at least 30% of its board members are not women. Further, CalSTRS will vote against the nominating and governance committees of Russell 3000 companies that fail to disclose their board members’ diversity characteristics. Mastagni added: “We not only expect disclosure of the diversity of board members, we want at least one board director from each of these […] companies to be from a typically underrepresented population.” 

 

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