CalPERS Releases Its First Climate Change Risk Assessment
In its first ever assessment of climate change’s potential impacts on pension risk, the California Public Employees Retirement System has found that 20% of its investments are in sectors vulnerable to climate change, including energy, forestry, transportation, food, and agriculture. Those sectors face future peril, not only from a warming climate, but from preventative measures to address the issue like carbon taxes and regulations on greenhouse gas emissions.
The report was mandated by SB 964. CalPERS and CalSTRS will be required to submit climate risk assessments every three years.
“It’s ultimately smart portfolio management,” the bill’s author Sen. Ben Allen (D-Santa Monica) told the Los Angeles Times.
Experts say the report has some glaring shortcomings. CalPERS’ assessment ignored Scope3 emissions — indirect pollution from things like employee travel — which can make up as much as 90% of a company’s carbon footprint. That means the fund’s vulnerability to climate change could actually be much higher.
Read the draft report here.