CalSTRS Selects Hermes, Impax and Schroders


Stockholm (NordSIP) – The California State Teachers’ Retirement System (CalSTRS) announced the selection of three new global equity investment managers – Hermes Asset Management, Impax Asset Management, and Schroders. The firms will collectively manage US$ 750 million across non-U.S. focused strategies and were “selected to drive long-term value creation through intensive ESG integration”, according to the pension fund.

CalSTRS is the largest educator-only pension fund in the world, with a portfolio valued at US$226 billion at the end of May 2019. CalSTRS serves California’s more than 949,000 public school educators and their families from the state’s 1,700 school districts, county offices of education and community college districts. A hybrid retirement system, CalSTRS administers a combined traditional defined benefit, cash balance and voluntary defined contribution plan.

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“The three firms, (…) are highly attuned to how sustainability-related trends, like the low carbon transition and resource efficiency, create investment risks and opportunities,” said Kirsty Jenkinson, director of Sustainable Investment and Stewardship Strategies. “We are excited about these new partnerships and their expertise in delivering resilient financial returns amid a rapidly changing global economy.”

Jenkinson added that the firms offer geographic diversification and apply analytical rigour in incorporating environmental, social and governance factors into fundamental analysis—all while maintaining a long-term investment horizon.

“This is the culmination of a thorough and rigorous selection process that allowed us to identify proven industry leaders with expertise in integrating ESG analysis into investment decision-making,” Portfolio Manager Brian Rice at CalSTRS added. “We believe they will bring positive environmental and social as well as financial impacts to our portfolio.”

The firms are the first to emerge from a CalSTRS manager pool initiated in October 2016, which diversifies the US$6 billion Sustainable Investment and Stewardship Strategies portfolio. They join existing managers Generation Investment Management, AGF Investments and several activist managers focused on driving corporate governance and operational improvements.

Photo © CalSTRS

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The coronavirus epidemic has further accelerated the rise of ESG into the investment mainstream. As deficits skyrocket, bond investors have an opportunity to engage with governments on climate change, argues Thomas Dillon, Senior Macro ESG Analyst at Aviva Investors.

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