Founding Partner blog: Largest U.S. Pension Fund To Invest $100 Billion In Climate Solutions By 2030


There are times when an established company, an investor, a startup makes a move that is so strategic—so in tune with the risks and the opportunities of the moment—that it marks the shift between the market’s past and its future.

We recently witnessed that moment.

In a bold step tailored to meet the existential challenges and colossal financial risks of a warming climate and harness the massive opportunities of the shift to a new clean economy, California Public Employees’ Retirement System, the largest public pension fund in the U.S. managing $446 billion, announced plans to invest $100 billion in climate solutions by 2030.

This step, which doubles down on the pension fund’s climate investing plans for the next seven years, underpins the comprehensive strategy that CalPERS laid out for achieving its goal of cutting emissions from its portfolio investments to net zero by 2050 while assuring long-term financial results for its pensioners.

In the process, it makes starkly clear that transition plans—the specific and concrete strategies and timelines investors and companies are adopting for reaching their climate goals and acting on climate-related risk—aren’t about being defensive.

They’re about addressing the major risks that financial markets and companies face as a result of the changing climate—the supply chain disruptions, the diminished worker productivity, the damage to corporate infrastructure and the communities businesses operate in. Risks that continue to escalate. Recent government data shows that weather-driven disasters, including wildfires, flooding, and drought, are happening more frequently in the U.S., costing $150 billion annually, with the number of billion-dollar disasters growing sixfold since the 1980s, from three disasters on average annually to 18 annually in recent years.

Just as critically, transition plans are about embracing the booming new clean economy, creating new markets, and investing in the next batch of winners as this shift continues to accelerate exponentially—and avoiding being left behind with dwindling markets, outmoded business models, and stranded assets. This year, a record $1.8 trillion was poured into clean energy investment alone, far outpacing investment in fossil fuel energy, according to the International Energy Agency.

CalPERS’ investment calculus is based solidly on a transition plan that combines ambition, analytics, engagement, and deep risk assessment. The plan sets a high standard and a plan necessary to remain competitive in the changing economy and take the appropriate steps for managing financial risk and protecting long-term shareholder value…

Read the original article in full here on Forbes.