Daily ESG Briefing: CalSTRS commits to Net Zero

The latest developments in sustainable finance

CalSTRS, the $310bn pension fund for California state teachers, has committed to make its entire investment portfolio Net Zero by 2050 or sooner. The Teachers Retirement Board (TRB), which governs CalSTRS, has approved a Net Zero implementation plan based on the science-based targets of the Paris Agreement and consistent with the United Nations’ Race to Zero campaign, the global effort of cities, businesses and investors to address dangerous climate change.

CalSTRS said its Net Zero Action Plan will establish a baseline and milestones for assessing its CO2 emissions-related investment risks, while at the same time expanding its allocations to investments in low-carbon solutions. It will also toughen its Net Zero corporate engagement strategy with its investee companies. The fund said it would aim to report annually on its progress towards Net Zero investments. Its staff research reports found that failure to align its portfolio with the Paris Agreement exposes it to transition risks, which it says “are reasonably foreseeable given the science and the collective global movement towards Net Zero”.

The European Investment Bank (EIB) has created a Climate and Environment Advisory Council to help the EIB Group reach its climate action and sustainability ambitions. Members include ECB President Christine Lagarde; Jos Delbeke, Professor, European Institute Florence; Helena Viñes Fiestas, Commissioner, Spanish Financial Markets Authority; Johan Rockström, Director, Potsdam Institute for Climate Impact Research and Francesco Starace, CEO of Italian utility giant Enel. The group held its first meeting yesterday, discussing adaptation and Paris Alignment. 

The US Department of the Treasury’s Federal Insurance Office (FIO) has joined the UN-convened Sustainable Insurance Forum (SIF). The SIF is a network of 31 insurance supervisors, regulators and authorities working to strengthen responses to sustainability and climate change challenges facing the sector. The FIO joining the Forum comes just days after it issued a Request for Information on the insurance sector and climate-related financial risk. It is asking for comments to be submitted by 15 November. 

Amazon has announced an investment partnership with the Nature Conservancy, which will see it channel funds into nature-based carbon removal solutions in Brazil. The company did not disclose how much it planned to commit to the ‘Agroforestry and Restoration Accelerator’, but said that its initial investment would support 3,000 farmers and restore approximately 20,000 hectares of rainforest in the Brazilian state of Pará, with the capability of removing up to 10m tonnes of CO2 by 2050.

Just over 40% of the 1,325 CEOs surveyed for KPMG’s 2021 CEO Outlook say they struggle to tell a compelling ESG story. Around 70% of respondents said CEOs will increasingly be held personally responsible for driving progress in addressing social issues, but 56% said that they will struggle to meet expectations “with public, investor and government expectations of diversity, equity and inclusion rising so fast”. Meanwhile, 58% said they’re seeing demand from stakeholders for increased reporting and transparency on ESG issues.

Funds in Australian responsible investments rose by a third to A$1.28tn (€797bn), with best practice ESG funds seeing the highest inflows, according to the Responsible Investment Association Australasia’s 20th annual benchmark report. While responsible assets under management are up massively from A$500m 20 years ago, only a quarter of investment managers are practicing a leading approach to responsible investment, with most of those managers based offshore, the report says. Among consumers, climate change, human rights and animal cruelty are among the most popular topics, with funds not yet having caught up to the increased interest in human rights, the report says.