Stockholm (NordSIP) – CalPERS, the California Public Employees’ Retirement System, has been reported to be in the process of directing US$25 billion towards green private market investments. CalPERS is one of the world’s largest private pension funds with US$ 464.6 billion in assets, for the fiscal year of 2022/23.
CalPERS’ Climate Investments
This announcement is the latest detail regarding the US$100 billion 2030 Net-Zero pledge CalPERS made in November 2023. At the time of this commitment, CalPERS already held close to US$47 billion in low-carbon assets. This week’s Financial Times (FT) interview with Peter Cashion, Calpers’ managing investment director, sustainable investments, provides the first details of where the American pension fund intends to allocate the extra US$53 billion.
“Our 2030 strategy for sustainable investing is the next step in CalPERS’ efforts to improve our long-term investment returns while also making meaningful progress in the fight against climate change,” said Chief Executive Officer Marcie Frost. “In addition, we are continuing the important work of promoting inclusive corporate leadership and the rights of workers,” CalPERS commented in November.
Taking the Private Market Route
In March 2024, CalPERS also announced it would increase total private market allocations from 33% of plan assets to 40%. “Strong and ongoing growth in private equity returns is behind this measured and appropriate increase,” CalPERS Trustee David Miller, chair of the Investment Committee, said in March. “Market conditions are evolving, and the investment team needs latitude to deploy capital intelligently to keep the fund on track for sustainable returns.”
As of the end of the first quarter of this year, Calpers has decided to allocate 37% of its US$ billion balance sheet to public equities, 17% to private equities, 28% to (public) fixed income, 8% to private debt, and 15% to real assets.
What is CalPERS Looking For?
The FT article suggests that CalPERS will direct its private market investments towards renewable infrastructure and “private equity investments in companies that support the shift to clean energy,” with a focus on companies maintaining wind turbines facilitating software solutions to solar panel efficiency.
Geographically, Cashion hinted at a particular interest in Asia and Europe. CalPERS will seek smaller and specialised asset managers to carry out these US$25 billion in green private market investments.
