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California Public Employees' Retirement System CalPERS

PRI reporting framework 2019

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Outputs and outcomes

LEA 09. Number of companies engaged with, intensity of engagement and effort

Indicate the proportion of companies from your listed equities portfolio with which your organisation engaged with during the reporting year.
We did not complete any engagements in the reporting year.

Number of companies engaged

(avoid double counting, see explanatory notes)

Proportion of companies engaged with, out of total listed equities portfolio

Individual / Internal staff engagements

1702
17

Collaborative engagements

112
1

09.2. Indicate the proportion breakdown of engagements conducted within the reporting year by the number of interactions (including interactions made on your behalf)

No. of interactions with a company
% of engagements
One interaction
2 to 3 interactions
More than 3 interactions
Total
100%

09.3. Indicate the percentage of your collaborative engagements for which you were a leading organisation during the reporting year.

Type of engagement

% Leading role

  Collaborative engagements

09.5. Additional information. [Optional]


LEA 10. Engagement methods

10.1. Indicate which of the following your engagement involved.

specify

          When necessary, staff will coordinate company meetings at third party conferences and events (e.g. CII, Ceres, ICGN).
        

10.2. Additional information. [Optional]

Partnerships: where applicable CalPERS will use strategic partnerships to advance CalPERS' investment, engagement and policy objectives.

Internal Asset Class Subject Matter Experts: when applicable CalPERS will use internal asset class subject matter experts in our engagement work such as providing financial analysis and participating in the engagement with the entity.

CalPERS Governance Architecture:  CalPERS developed working groups to guide the ESG decision making process for strategic issues. Working groups include:

  • Governance and Sustainability Subcommittee
  • Proxy Voting Working Group
  • Research Working Group
  • Correspondence Working Group
  • Financial Markets Working Group

LEA 11. Examples of ESG engagements

11.1. Provide examples of the engagements that your organisation or your service provider carried out during the reporting year.

ESG Topic
Diversity
Conducted by
Objectives

Improve board diversity at Russell 3000 companies

Scope and Process

Staff wrote letters to 504 companies within the Russell 3000 lacking gender diversity to disclose their approach to board diversity. Staff also sent follow up letters to non-responding companies which led to meaningful conversations. Starting in the 2018 proxy season, CalPERS withheld votes from directors at non-responsive companies. 

Outcomes
ESG Topic
Shareholder rights
Conducted by
Objectives

Request portfolio companies to adopt majority vote for director elections.

Scope and Process

Identify and engage portfolio companies without a majority vote standard for director elections. 

Outcomes
ESG Topic
Shareholder rights
Conducted by
Objectives

Request companies to adopt proxy access.

Scope and Process

Staff identified 25 companies for engagement. CalPERS sent letters to these companies requesting engagement related to the adoption of proxy access.

Outcomes
ESG Topic
Human rights|Labour practices and supply chain management
Conducted by
Objectives

Engage a subset of US large cap companies seeking to enhance disclosure tied to human capital management activities.

Scope and Process

In collaboration with the Human Capital Management Coalition, CalPERS will engage companies that have publicly disclosed workforce-related information to understand how HCM fits into corporate strategy and goals.

Outcomes
ESG Topic
Climate Change|Sustainability reporting
Conducted by
Objectives

Engage corporations with the largest greenhouse gas emissions to improve governance on climate change, curb emissions and strengthen climate-related financial disclosures at the top 100 systemically important carbon emitters.

Scope and Process

Working through partner organizations, the Climate Action 100+ is a five-year initiative aimed towards the largest corporate greenhouse gas emitters. To achieve the goals of the Paris Agreement, the initiatives aims to:

  1. Implement a strong governance framework which clearly articulates the board’s accountability and oversight of climate change risk and opportunities.
  2. Take action to reduce greenhouse gas emissions across their value chain, consistent with the Paris Agreement’s goal of limiting global average temperature increase to well below 2-degrees Celsius above pre-industrial levels.
  3. Provide enhanced corporate disclosure in line with the final recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and sector-specific Global Investor Coalition on Climate Change Investor Expectations on Climate Change* (when applicable) to enable investors to assess the robustness of companies’ business plans against a range of climate scenarios, including well below  2-degrees Celsius scenario, and to improve investment decision-making.

The steering committee comprises of members from the following investor groups:

  • Asia Investor Group on Climate Change (AIGCC)
  • Ceres
  • Investor Group on Climate Change (IGCC)
  • Institutional Investors Group on Climate Change (IIGCC); and
  • Principles for Responsible Investment (PRI)

Public information on this initiative can be found here: http://www.climateaction100.org/

Outcomes
ESG Topic
Shareholder rights
Conducted by
Objectives

Request proxy access at portfolio companies in the United States.

Scope and Process

CalPERS partnered with the New York City Comptroller's Boardroom Accountability Project by engaging and soliciting votes in support of individual proxy access shareowner proposals.

Outcomes
ESG Topic
Climate Change
Conducted by
Objectives

CalPERS engages major oil and gas, coal, and electric power companies to:

  • review exposure to long-term, climate change related risks and its plans for managing them;
  • conduct a risk assessment aligned with the 2 degrees scenario
Scope and Process

Staff identified and engaged companies surrounding the adoption of climate risk reporting.

Outcomes
ESG Topic
Human rights|Anti-bribery and corruption
Conducted by
Objectives

Engage the companies involved in the Dakota Access Pipeline (DAPL) controversy as it related to CalPERS Governance and Sustainability principles.

DAPL is a pipeline that transports that transports crude oil from North Dakota to Illinois. During the construction of the final section of the pipeline in North Dakota, more than one route was considered, including a route 10 miles north of Bismarck, North Dakota, and another route approximately half of a mile upstream from the Standing Rock Sioux tribe’s reservation. Following concerns around the potential impact on drinking water quality around the town of Bismarck, the route near the Standing Rock Sioux tribe’s reservation was selected.  

Scope and Process

CalPERS staff reviewed its total fund portfolio exposure to DAPL and conducted the following activities around DAPL. 

• Engaged the pipeline operator known as Energy Transfer Partners (ETP) including its investors.

• Engaged the banks financing DAPL and helped develop an Investor Statement to banks financing DAPL. 

• Convened a multi-stakeholder briefing with the leadership of the Standing Rock Sioux Tribe to engage with the banks and shareowners.

• Supported shareowner proposals requesting Indigenous Peoples’ rights policies and a report on environmental and social risk due diligence processes.

• Engaged with labor unions regarding human capital concerns. 

• Engaged the Equator Principles Association, an organization that provides banks with best practice guidelines for environmental and social risks in project finance.

Outcomes
ESG Topic
Human rights|Health and Safety
Conducted by
Objectives

CalPERS sought to engage company boards of companies  that retail or wholesale assault weaponse and companies that manufacture or sell accessories that can accelerate a semi-automatic rifle's rate of fire.

Scope and Process

Under this policy, staff responded to the Treasurer’s request with the following:  1. Identified portfolio companies potentially applicable to the Treasurer’s request. 2. Sent written correspondence in November 2017, to five portfolio companies requesting: 

“If assault weapons and accessories are indeed available for sale in your stores, we ask that the Board review the reputational and associated risks which this poses to your company in the wake of recent tragedies. We ask that you review the revenues which are earned from the sale of these weapons and accessories, and consider removing them from being sold to the public in your stores. We appreciate there are various federal and state requirements attendant upon purchase of firearms. However, our concern is around the Board’s responsibilities to address risks to its reputation and brand.”

Outcomes

11.2. Additional information. [Optional]


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