CalPERS invests $1bn in a new ESG global equities strategy

Fund also looking for more corporate reporting on sexual harassment settlements.

The California Public Employees Retirement System(CalPERS) has invested $1bn in a new ESG global equities strategy. The $357bn Californian pension giant funded the internally managed QSI Global ESG strategy in February 2018. Further details on the strategy have not been disclosed and CalPERS declined to comment. According to documents published this month, it hired QSI Inc in November 2017 to provide “investment advisory services” for the global equities program. The QSI contract is set to run for five years and was won without a competitive tender. CalPERS is paying QSI fees that documents say could be more than $1 million per year.
CalPERS is also currently seeking to introduce a “new principle” on corporate disclosure of sexual harassment settlements in its Governance and Sustainability Principles. It states that: “Financial reporting standard setters generally require disclosure of material settlements, including those involving sexual harassment. CalPERS supports the disclosure of settlements, including those on sexual harassment, involving an executive or member of the board to be disclosed”.The amendments, which the Investment Committee was invited to feedback on at a meeting on the 16th April, will be included in its revised Total Fund Policy to be published in May 2018, unless objections are raised. It follows reports that CalPERS owned about $32m of Wynn Resorts Ltd. whose shares fell dramatically in January after the Wall Street Journal reported allegations that founder Steve Wynn had harassed numerous women. The proposed revision is part of the fund’s five-year ESG Strategic Plan for Sustainable Investment and its 2017-18 Business Plan goals of Investment Beliefs and Environmental, Social, and Governance (ESG) risk integration. A spokesperson for CalPERS declined to comment on the new ESG strategy and revision to its Governance and Sustainability Principles. CalPERS recently promoted Beth Richtman to the newly created role of Managing Investment Director of its Sustainable Investment Program. Richtman, who was previously an investment manager, will lead the ESG team and manage the integration of ESG factors into investment decision across the fund. It also announced last month that diversity and climate risk reporting are its priorities in its engagement strategy to improve financial returns in 2018.

Read the RI interview with Anne Simpson, CalPERS’ investment director for sustainability on the campaign to get corporate boards to think long term. Click to read