The California Employees' Retirement System has launched the Sustainable Investment Research Initiative to help drive innovative thought leadership that will inform and advance the organization's understanding of sustainability factors and the impact they have on financial performance.
CalPERS also is accepting papers from scholars and investment practitioners globally in the fields of finance, economics, accounting, law and business. The papers will contribute to the debate about the impact of environmental, social and governance issues on long-term value creation and capital market stability.
CalPERS will partner with the UC Davis Graduate School of Management to seek, collect and review the papers. Authors of the most distinguished papers will be invited to present their research at the inaugural Sustainability & Finance Symposium, to be hosted by UC Davis on June 7. Columbia Law School's Millstein Center for Global Markets and Corporate Ownership also will assist with the call for papers.
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"CalPERS has made it a priority to use sustainability factors in making investment decisions across our Fund," said Anne Simpson, CalPERS senior portfolio manager and director of global governance. "This initiative will aid us in our application, and help us draw conclusions that can inform our investment strategy and beliefs."
Steven C. Currall, dean of the UC Davis Graduate School of Management, said that, "We look forward to working with CalPERS on this path breaking research to provide an independent analysis to better understand the potential impact of ESG issues on capital markets, companies and intermediaries in the investment chain. This project is both theoretical and practical."
"Improving our understanding of the relationship between ESG and long-term performance is critical for boards of directors, shareholders and indeed everyone who relies upon public companies to be responsible stewards of capital," said Robert Jackson, Jr., associate professor of law, Milton Handler Fellow and co-director of the Ira M. Millstein Center for Global Markets and Corporate Ownership at Columbia Law School. "We are delighted to be working with CalPERS on this important initiative, and look forward to valuable new conversations with academics, practitioners, and investors on these critical questions."
In current scholarship and in the investment world, there is a lack of global consensus on how ESG factors influence investment risk and return across asset classes. ESG issues cover many topics, ranging from climate change, labor practices and human rights, to executive compensation.
In 2011, the CalPERS Board approved integrating ESG issues as a strategic priority across its investment portfolio. It is grounded in the three forms of economic capital – financial, human and physical – that are needed for long-term value creation, according to the Pension Fund's 2012 report, "Towards Sustainable Investment." SIRI will provide independent evaluation and insight for CalPERS sustainability strategy, as well as contribute to the larger debate.
CalPERS is the largest public pension fund in the U.S. with assets totaling $251 billion.
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