The California State Teachers Retirement System (CalSTRS), at $186.8bn (€162.5bn) the world’s largest educator pension fund, is reporting scope 3 greenhouse gas emissions this year – though it is limiting them to just airline, rental car and hotel emissions for now.
So-called scope 3 emissions encompass all indirect business-related emissions outside of scope 1 and 2, which fund has been reporting for over a decade.
Scope 3 emissions have risen from 536.55 tons in 2013 to 774.24 tons in 2015, according to the Sacramento-based fund’s new Sustainability Report.
“This year, CalSTRS is reporting a set of scope 3 emissions,” the fund says. “Although scope 3 emissions encompass all indirect business-related emissions outside of scope 1 and 2, CalSTRS is only reporting airline, rental car and hotel emissions at this time. Figures are representative of all CalSTRS employees.”
CalSTRS has been reporting its headquarters scope 1 and 2 greenhouse gas emissions to the North American nonprofit organization the Climate Registry since 2005. Scope 1 and 2 emissions are based on the building’s electricity purchases, natural gas usage, mobile fleet fuel usage and fugitive emissions.
Scope 3 emissions typically encompass purchased goods and services, business travel, employee commuting, waste disposal, use of sold products, transportation and distribution – and investments, though they are not being reported on by CalSTRS as yet.The fund says it strongly believes the issues presented in Carbon Tracker’s Unburnable Carbon 2013: Wasted Capital and Stranded Assets report calls for action.
Of the top 200 global fossil fuel companies listed on the Carbon Tracker website, CalSTRS has engaged 44 US companies held in its portfolio requesting disclosure.
Exposure to green bonds has grown tenfold in the past two years
CalSTRS reiterated in the report that it prefers constructive engagement to divesting as a means of affecting the conduct of companies, saying: “Our fiduciary obligations generally prohibit us from sacrificing investment performance for the purpose of achieving goals that do not directly relate to our operations or providing promised retirement benefits.”
It argues that any actions around divestment must be “carefully weighed against our fiduciary duty to perform profitably”. It believes having a “voice at the table” is an effective tool to mitigate risk such as climate change: “Aligned interests working in concert can influence capital market change.”
It added that its exposure to green bonds has grown tenfold in the past two years. Holdings grew from $25 million in 2013 to $264 million in 2015.