Another View: Divesting means losing a seat at the table

07/17/2014 12:00 AM

07/16/2014 7:38 PM

Three East Bay mayors are calling for the California Public Employees’ Retirement System to divest from fossil fuel companies (“CalPERS should pull money from fossil fuels industry,” Viewpoints, July 10). We all have a shared concern with climate risk, but our view is that the solution lies in engaging energy companies in a process focused on finding solutions, rather than walking away.

We at CalPERS talk to more than 100 companies on an annual basis to ensure the high standards of corporate governance that underpin effective climate change risk management, and we invest in climate change solutions across our global equity, private equity and real estate portfolios.

The issues raised by climate change are complex and challenging. Over the last two decades, we have been at the forefront of tackling climate change issues through policy advocacy, engagement with companies and investments in climate change solutions – something we would not be able to do if we did not have a seat at the table. We have also reduced the carbon footprint of our own operations: Since 2006 we have cut greenhouse gas emissions by 30 percent.

CalPERS was a founding member of the Investor Network on Climate Risk, a leading group of 100 institutional investors representing more than $10 trillion in assets, addressing a policy agenda that calls on governments and regulators to introduce carbon pricing and disclosure, so that risks can be tackled effectively.

CalPERS is also actively collaborating in the Carbon Asset Risk Initiative, led by the nonprofit Ceres, which draws together 70 global investors managing more than $3 trillion in assets. The initiative asks 45 large oil and gas, coal and electric power companies – including ExxonMobil, Royal Dutch shell, BHP Billiton, Rio Tinto and Vale – to assess the financial risks climate change poses to corporate business plans.

We have a fiduciary duty to be a principled and effective investor to meet our financial commitments to our members and future members. Addressing climate change is paramount to this commitment, and we will continue to partner with other like-minded investors to advocate for change on this important issue.

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