California’s SB 964 requires nation’s two largest pension funds to consider climate-related risks of investments

On September 23, 2018, California Governor Jerry Brown signed SB 964 into law to help combat the long-term problems of global climate change. 

The California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) are the two largest pension funds in the United States, with assets totaling over $570 billion.  CalPERS and CalSTRS provide retirement and health benefits to more than 2 million state and local public employees and public school educators.

SB 964 will require CalPERS and CalSTRS to consider “climate-related financial risk” when making investment decisions.  The bill requires the CalPERS and CalSTRS boards to provide a public report every three years detailing the “climate-risk” associated with investments in utilities, coal, oil, gas, and other industries with large carbon footprints.  These reports must discuss how investments in these industries align with California’s climate policy goals, and if these investments expose the retirement assets of CalPERS and CalSTRS to long-term risk of investment losses. 

This bill is the first of its kind in the country.  By requiring the nation’s two largest pension funds to analyze and report on climate risks, the bill will have a significant impact in shaping investment models for social good and may influence investment decisions made by other organizations.​

The bill takes effect on January 1, 2020. 

By Caitlin Gray | October 24, 2018

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