• The California Public Employees’ Retirement System is more than halfway to its goal of investing more than $100 billion in climate solutions, the pension fund announced last week.
• CalPERS, the largest pension fund in the nation, said it had invested $53 billion in climate solutions, a year after it set the $100 billion target, according to a Nov. 18 press release.
• While the climate solution funding goal is part of CalPERS’s 2030 sustainable investing strategy, some of its beneficiaries and climate groups are pushing the fund to stop investing in ExxonMobil bonds. The beneficiaries — who sent an open letter to the fund and publicly testified Nov. 18 — said such bonds “fuel oil and gas expansion” and “many” wouldn’t mature until past CalPERS 2050 net-zero target date.

Dive Insight:

CalPERS said it had already identified $47 billion in climate solutions when it launched its $100 billion investing target last year. Since then, the value of those investments has increased to $50 billion, and CalPERS has invested an additional $3.6 billion in private equity and infrastructure climate solutions, the fund said in its press release.

The $100 billion climate action plan focuses on investing in various climate adaption, transition and mitigation efforts. CalPERS CEO Marcie Frost called the energy transition “one of the biggest investment opportunities in history” and said in the release that the fund aims to “provide the capital necessary” to help build a low-carbon economy.

“We believe that making sound, long-term investments in climate solutions will generate outperformance while also providing the clean energy needed to meet the increased demands that people have for their homes, cars and technology,” Stephen Gilmore, the fund’s chief investment officer, said.

The pension fund made investments in United Kingdom-based renewable energy company Octopus Energy since announcing its goal to double its climate investments. The fund also has a private equity investment partnership with climate fund TPG Rise Climate, as well as another partnership with Brookfield Asset Management. Earlier this year, CalPERS said it would commit $25 billion to private market climate solutions as part of its sustainable investing goal.

CalPERS said its officials are reviewing details for deals comprising an additional $3.2 billion in climate-related investments.

Despite the reported progress, CalPERS beneficiaries were joined by nonprofits the Sierra Club and California Common Good in asking the pension fund to cease investing in bonds issued by Exxon. The fund’s beneficiaries made the request Nov. 18, the same day as the CalPERS progress report, both at a CalPERS board meeting and via a letter signed by around 2,000 beneficiaries and supporters.

The groups called for a CalPERS moratorium on purchasing Exxon bonds, because “despite CalPERS and other investors’ efforts to engage with Exxon, the corporation remains committed to a business model that is fueling the climate crisis.” After a pair of investors issued an emissions reductions-related shareholder proposal, Exxon bypassed the typical Securities and Exchange Commission process for exclusions and opted to instead file a lawsuit that was later dismissed.

The open letter warned that CalPERS could be left holding a diminished bag of returns on the bonds, which also have a late maturation — with Sierra Club noting the energy giant issued bonds with a 2074 maturation date this fall.

“Purchasing bonds from Exxon is risky,” the open letter said. “Whether ExxonMobil fails to repay the bonds or its polluting activities contribute to diminishing returns across the economy, CalPERS beneficiaries will be left holding the pursestrings.”

Sierra Club said the bonds “represent unrestricted funds for ExxonMobil to continue to pursue fossil fuel expansion and plastic pollution” past when the world is hoping to reach net-zero. Allie Lindstrom, a senior strategist on the Sierra Club’s fossil-free finance campaign, said in a press release Friday that the 2074 maturation date is “indicative of ExxonMobil’s commitment to business-as-usual.”

“ExxonMobil poses some of the most powerful opposition to climate action at every level of government,” Lindstrom said. “These Exxon bonds are an especially risky gamble for investors with long-term obligations — such as public pensions. Beneficiaries are calling on CalPERS to protect our futures: Their retirement and our climate.”

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