Investment firm CalSTRS has officially appointed a manager for a $450 million sustainable equity assignment.
California State Teachers' Retirement System (CalSTRS) has announced an expansion of its Sustainable Investment and Stewardship Strategies (SISS) portfolio, with a focus on more sustainable private market investments. The portion of assets committed to the SISS portfolio is set to grow to 5% of the pension fund.
As part of this expansion, CalSTRS has appointed Nordea Asset Management (NAM) to manage a $450m global equity mandate. The Global Stars Equity Strategy, selected by CalSTRS for management, incorporates environmental, social, and governance risk factors. This strategy offers investors an immediate reduction in carbon emissions relative to a benchmark investment and is aligned to net zero.
Kirsty Jenkinson, investment director at CalSTRS, stated that the sustainability-focused approach of the Global Stars Equity Strategy aligns closely with the mandate of the SISS portfolio. The strategy's current carbon footprint is 61% below the MSCI ACWI benchmark.
In addition to the global equity mandate, CalSTRS has partnered with NAM on an engagement initiative aimed at encouraging investee companies to join the Oil and Gas Methane 2.0 Partnership (OGMP). The OGMP is a framework to reduce global methane emissions. Members of the OGMP commit to setting methane emissions targets in line with a 45% reduction by 2025 and 60-75% by 2030.
CalSTRS' investment strategies continue to prioritize sustainability and climate solutions, as demonstrated by its partnership with NAM and its allocation to climate solutions. The pension fund has allocated 1% of its fund, approximately $3bn, to invest solely in climate solutions offered on the unlisted markets.
Emily Holtham, responsible for sustainable investments and stewardship at CalSTRS, stated that the engagement initiative with NAM is part of CalSTRS' efforts to encourage companies to address climate change and reduce their carbon footprint. Nordea has been a valuable partner in CalSTRS' stewardship efforts focused on meeting its pledge to achieve a net zero portfolio by 2050 or sooner.
The expansion of the SISS portfolio will incorporate more sustainable private market investments, as previously mentioned. This move reflects CalSTRS' commitment to sustainable investing and its efforts to make a positive impact on the environment and society.
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