CalPERS opposed 95 directors at CA100+ firms last year

CalPERS has revealed that its new climate criteria resulted in the California public pension giant opposing 95 directors at 26 high-emitting companies that it engaged as part of the Climate Action 100+ initiative last year.

The $453 billion fund made the disclosure in an update on its proxy voting and corporate engagement, which will be presented to the fund’s investment committee on Monday. 

CalPERS introduced what it described as “specific climate-related criteria to hold directors accountable at all CA100+ companies” in 2022. 

It added that these considerations will now be applied to high-emitting companies in its portfolio beyond the 166 firms in the CA100+ universe.  

Details of which company directors were targeted were not included in the agenda item and CalPERS had not responded to a request for more information at the time of publication. 

In an update to its proxy voting guidelines released last month, CalPERS similarly stated that for the largest emitters in its portfolio it would “withhold votes from relevant committee members (and/or board leadership) who serve on a board that demonstrated a lack of board oversight related to climate-related risks”. 

It added that it may consider “elements” of the CA100+ company benchmark to help inform its voting. 

The history of CA100+ is inextricably linked with CalPERS. The multi-trillion-dollar investor group grew out of a carbon footprinting exercise undertaken by the pension fund in 2015, which revealed that around 80 companies were responsible for roughly half of CalPERS’ emissions out of a portfolio of thousands of businesses. 

According to Responsible Investor’s database, CalPERS co-leads engagement with around 19 CA100+ companies, including US oil major Exxon Mobil; auto manufacturers Honda, Nissan, Suzuki and Toyota; and consumer giants Coca-Cola, PepsiCo and Proctor & Gamble.

It also co-leads engagement with Berkshire Hathaway and co-filed a climate proposal at the Warren Buffett-controlled conglomerate last year. That resolution, which called for disclosure of physical and transitional risks and opportunities linked to climate change, secured support of 27 percent at the company’s annual meeting in April – a tally that equated to more than 45 percent when the votes of insiders were discounted. 

CalPERS also withheld its support for seven of the 15 directors up for election at Berkshire Hathaway in 2022, on two occasions explicitly on account of the firm’s failure to disclosure information on climate risks.

The fund revealed its voting stance on the duo ahead of Berkshire Hathaway’s annual meeting in a filing at the US Securities and Exchange Commission called an “exempt solicitation”, which informs other shareholders how an investor plans to vote and why.  

Investor action against the boards of big emitters has grown in recent years. In 2021, Engine No.1 secured three positions on the board of ExxonMobil for its nominees, which the US activist fund believed were better placed to steer the company in a decarbonising world.

Then in November, four “climate competent” directors were elected to the board of Australian energy firm AGL following a pioneering campaign by Grok Ventures, the activist fund owned by tech billionaire Mike Cannon-Brookes.

Last month, however, a report by US non-profit Majority Action raised concerns that the most significant CA100+ investors were not taking a strong enough stance on directors, finding that 42 of these key signatories – defined by assets under management or role in engagements – supported 90 percent or more directors at US-based focus companies.