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Four quick questions with… CalSTRS

Significant macroeconomic shifts, such as the low-carbon transition, bring both opportunities and risks, says chief investment officer Christopher Ailman.

Christopher Ailman
Christopher Ailman

In September, the Teachers’ Retirement Board, which governs the California State Teachers’ Retirement System, committed to net-zero greenhouse gas emissions across its investment portfolio by 2050 or sooner, in line with the goals of the Paris Agreement.

The net-zero pledge follows the launch of the pension fund’s low-carbon transition work plan in October 2019, which aims to analyse and reduce climate-related risk on its portfolio and identify investment opportunities in climate-related solutions. Here, chief investment officer Christopher Ailman answers four quick questions about CalSTRS’ approach to climate change.

CalSTRS has committed to a net-zero portfolio; what steps will you take to achieve this?

Right now, we’re looking across our $312 billion portfolio and assessing our opportunities. Regardless, we are taking a slow, steady approach to reductions over 29 years.

What opportunities lie in the transition to a low-carbon economy?

It’s a comprehensive macroeconomic shift, a huge change, and in big changes come opportunities and risks.

How else is CalSTRS approaching climate risk?

CalSTRS is looking at the economic impacts the changing climate is having on the portfolio in terms of physical risk, transition risk and regulatory risk.

Per PEI’s LP Perspectives Study, 92 percent of LPs consider ESG in due diligence processes; how does CalSTRS engage with GPs on ESG?

CalSTRS engages constantly, consistently and sometimes urgently. It’s a complex discussion. Bespoke, in a word.