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CalPERS toughens standards on corporate governance
By Mark Glover - mglover@sacbee.com
Published 12:00 am PDT Tuesday, April 22, 2008
Story appeared in BUSINESS section, Page D1
The California Public Employees' Retirement System wants companies in its investment portfolio to be environmentally responsible and to have diverse boards of directors.
The investment committee of the world's largest public pension fund voted to affirm those standards during Monday's meeting in Sacramento, adding them to the system's Global Principles of Accountable Corporate Governance.
CalPERS pushes the companies in which it invests to abide by the principles. Among public investment entities, CalPERS has been a pioneer in using its financial muscle to promote better business practices and open up corporate boardrooms to major shareholders.
"Corporate governance is about aligning companies and investors to generate sustained, long-term share value," said Rob Feckner, president of the CalPERS board. "Achieving sustained performance must include company actions to respond to environmental risks.
"Companies also should ensure that they have the best mix of directors possible, maximizing diversity of backgrounds, perspectives and skills."
The expanded guidelines were proposed by John Chiang, state controller and a member of the CalPERS board.
Chiang said boardroom diversity is "a solid business proposition" that can tap into "a broad range of talents and ideas … (and) help us maintain a competitive edge in today's global markets."
He did not cite any studies proving that diversity helps the bottom line. Studies from the research group Catalyst found companies with a larger number of women on their boards produced better returns to shareholders than businesses with lower female representation.
In expanding the fund's environmental guidelines for investment, CalPERS cited a corporate governance checklist developed by Ceres, a coalition of investors, environmental groups and investment funds.
Ceres has been critical of numerous companies, including the Exxon Mobil Corp., for being less than forthcoming about dealing with looming environmental issues that, left unaddressed, could have a negative effect on investment portfolios. That includes carbon emissions.
About the writer:
- Call The Bee's Mark Glover, (916) 321-1184
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