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CalSTRS selects eight ESG-focused asset managers and will allocate up to $1bn

US pension giant names the firms after rigorous search

The $225.3bn (€181.6bn) California State Teachers’ Retirement System (CalSTRS) has selected eight ESG-focused asset managers – who will get cash to run when “the right investment opportunity” arrives.

It said the group (see below) of US and non-US fund firms is eligible to receive future allocations.

In a statement, the West Sacramento-based asset owner – in the news recently for pressing Apple over smartphone usage – said that it had selected the eight after a “rigorous 15-month process”.

“When the right investment opportunity presents itself, one or more of these managers are eligible to receive a commitment.”

While no investment funds have been committed to any of the managers, they are now eligible to receive an allocation when opportunities arise. Up to $1bn in total may eventually be committed.

CalSTRS, whose Director of Corporate Governance Anne Sheehan recently announced her retirement, is a leading light in the new US Investor Stewardship Group which seeks to create the first Stewardship and Governance Code in the country.

CalSTRS has posted a video in which Corporate Governance Portfolio Managers Brian Rice and Aeisha Mastagni explain why CalSTRS prefers engagement over divestment.They explain that divestment undermines its long-term strategy and increases risk in the portfolio by limiting diversification.

“We know that divestment doesn’t affect social change, Mastagni says, “ and there is no shortage of buyers for our assets.”

“And divestment eliminates CalSTRS’ rights as a shareholder and therefore our ability to advance positive change.” Rice details CalSTRS’ successful engagements on methane gas at Consolidated Edison and Chevron.

Selected managers/strategy

Impax Asset ManagementImpax Leaders
Impax AMImpax Water
Generation Asset ManagementAsia Fund
Brown AdvisoryLarge-Cap Sustainable Growth
SchrodersInternational Equity
NordeaEmerging Stars Equity
Hermes Investment ManagementGlobal Emerging Markets ESG
CandriamSustainable World Equities
RockefellerGlobal Sustainability and Impact Equity