California’s hard-working public educators have dedicated their careers to shaping the leaders of tomorrow. Their steadfast commitment to this cause exemplifies what is exceptional about our state, and why CalSTRS was created to honor our public educators by securing their financial future.

Climate change is one of the greatest threats to our future, impacting the planetary environment, global economy and worldwide health and safety. Moreover, the investment risks associated with climate change may impact the value of our investment portfolio without constant monitoring.

This is important because 60 cents of every dollar our members receive in modest, monthly retirement benefits come from CalSTRS’ investment gains. While we have never missed a pension payment, our ability to fulfill our educator-focused mission is dependent in large part on our long-term investment strategy and how we measure and address climate risk as investors.

CalSTRS is approximately 73% funded, and we remain on track toward full funding by 2046. Maintaining a diverse investment portfolio is critical to ensuring returns for our members. On the flipside, less diversification means more risk to the portfolio, which could lead to higher contribution rates and less resources for public education.

Sustainable investing across sectors is integral to our success as a fund. In 2004, CalSTRS began investing in climate solutions and, in 2006, we established a climate change stewardship program. We published our first Green Initiative Task Force Report in 2007 and, following additional significant climate actions, committed in 2016 to investing up to $2.5 billion in a low-carbon index. In 2018, we joined “Climate Action 100+,” an investor-led initiative compelling the world’s most significant corporate carbon emitters to take action on climate, and we are moving to achieving net zero greenhouse gas emissions within our portfolio by 2050 or sooner.

Currently, CalSTRS holds $20 billion in climate solution investments and is accelerating the net zero emissions transformation of companies in our investment portfolio, consistent with the Paris Agreement and goals of the United Nations’ Race to Zero campaign.

We are taking a holistic and inclusive approach to prepare our investment portfolio for a low carbon economy by directly engaging with the corporations in our portfolio, influencing public policies, and advancing sustainable business and investment practices to help propel a responsible transition to a global economy to meet our net zero pledge.

When traditional corporate engagement falls short of producing meaningful results, we have moved toward activist stewardship, a heightened and targeted level of engagement, like our successful shareholder campaign last year to elect three independent board directors to drive systemic change at ExxonMobil on emissions reduction.

Today, we are implementing an even more robust approach, ensuring that corporate directors are held accountable for creating long-term value and managing long-term risks. We are leveraging our position as shareholders during what is known as “proxy season” to oppose the election of directors who have moved too slowly on the critical areas of climate and board diversity. We are also voting for shareholder proposals that demand comprehensive public reports or set targets to reduce emissions, and concurrently, calling on the SEC for stronger rules on data disclosure.

For nearly 20 years, environmental, social, and governance principles have guided how CalSTRS manages long-term risks and captures investment opportunities. We are accelerating the pace of change while taking a patient, long-term view of investments.

We are confident about our evaluation and response to climate risk, we feel good about our role supporting public educators and making positive change for their students.