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California Public Employees' Retirement System CalPERS

PRI reporting framework 2019

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You are in Indirect – Manager Selection, Appointment and Monitoring » Monitoring

Monitoring

SAM 05. Monitoring processes (listed equity/fixed income)

05.1. When monitoring managers, indicate which of the following types of responsible investment information your organisation typically reviews and evaluates

ESG objectives linked to investment strategy (with examples)

Evidence on how the ESG incorporation strategy(ies) affected the investment decisions and financial / ESG performance of the portfolio/fund

Compliance with investment restrictions and any controversial investment decisions

ESG portfolio characteristics

How ESG materiality has been evaluated by the manager in the monitored period

Information on any ESG incidents

Metrics on the real economy influence of the investments

PRI Transparency Reports

PRI Assessment Reports

RI-promotion and engagement with the industry to enhance RI implementation

Changes to the oversight and responsibilities of ESG implementation

Other general RI considerations in investment management agreements; specify

None of the above

LE

FI - SSA
FI - Corporate (financial)
FI - Corporate (non-financial)
Private equity
Property
Infrastructure
ESG objectives linked to investment strategy (with examples)
Evidence on how the ESG incorporation strategy(ies) affected the investment decisions and financial / ESG performance of the portfolio/fund
Compliance with investment restrictions and any controversial investment decisions
ESG portfolio characteristics
How ESG materiality has been evaluated by the manager in the monitored period
Information on any ESG incidents
Metrics on the real economy influence of the investments
PRI Transparency Reports
PRI Assessment Reports
RI-promotion and engagement with the industry to enhance RI implementation
Changes to the oversight and responsibilities of ESG implementation
Other general RI considerations in investment management agreements; specify
None of the above

If you select any 'Other' option(s), specify

Please see SAM 5.3 for additional information regarding Private Equity

Real Assets (Property and Infrastructure):

The types of monitoring and management staff will perform include, but are not limited to:

Reviewing Managers’ compliance with ESG obligations in operating agreements and documenting and engaging with managers on any deficiencies.
Being responsive to ESG events and engaging on material ESG issues, where rights allow.
Reviewing Managers’ sustainable investment processes, practices, and reporting, and identifying ESG opportunities and risks. This includes but is not limited to:

Requesting that Managers respond to annual third party monitoring surveys such as GRESB or ULI GreenPrint (which may change from time to time) and discussing results with Manager.
Reviewing Manager’s ESG or sustainable investment reports, surveys and/or PRI reporting on an annual basis.
Inquiring about the status of identified ESG risks and opportunities in regular communication with Managers.

Identifying, learning and sharing of Manager’s best practices.
Reviewing and documenting material ESG issues that may impact the value of the portfolio.

05.2. When monitoring external managers, does your organisation set any of the following to measure compliance/progress

ESG score or assessment

ESG weight

ESG performance minimum threshold

Real world economy targets

Other RI considerations

None of the above

LE

FI - SSA
FI - Corporate (financial)
FI - Corporate (non-financial)
Private equity
Property
Infrastructure
ESG score
ESG weight
ESG performance minimum threshold
Real world economy targets
Other RI considerations
None of the above

If you select any 'Other' option(s), specify

For Property and Infrastructure: Responsible Contractor Program Policy and compliance with other RI requests from CalPERS, see also SAM 5.3.

For Private Equity: Please see SAM 5.3

For Fixed Income: For additional information regarding Fixed Income’s monitoring process please see CalPERS Fixed Income Sustainable Investment Practice Guidelines at the following URL:https://www.calpers.ca.gov/docs/global-fixed-income-sustainable-investment-guidelines.pdf

For Global Equity: for additional information regarding Global Equity's monitoring process please see CalPERS Global Equity Sustainable Investment Practice Guidelines at the following URL: https://www.calpers.ca.gov/docs/global-equity-sustainable-investment-guidelines.pdf

 

 

 

05.3. Provide additional information relevant to your organisation's monitoring processes of external managers. [OPTIONAL]

          Property and Infrastructure:  REFER TO THE ATTACHED “REAL ASSETS SUSTAINABLE INVESTMENT PRACTICE GUIDELINES          
https://www.calpers.ca.gov/docs/real-assets-sustainable-investment-guidelines.pdf 

Private Equity: 
CalPERS PE requests that its PE fund managers comply with the reporting practices in accordance with the ILPA’s Fee Reporting Template.
As part of on-going monitoring, Staff asks the GP questions about pending or existing litigation, including material litigation pertaining to ESG.
Additionally, for the top 10 managers in the PE portfolio by value, staff will inquire at the annual LPAC meetings regarding the Firm’s ESG-related issues, including:
-	Their ongoing process for identifying and acting on ESG-related opportunities and risks
-	New or ongoing litigation issues pertaining to ESG
-	Material ESG issues that may impact the value of the portfolio, including such items as assessing climate change risk.

Fixed Income:  Annually, global fixed income sends out a survey to external manager to articulate their ESG integration.  ESG Questionnaire for External Managers.docx THIS SURVEY ANSWERS MANY OF THE SAME INDICATORS ASSESSED IN SECTIONS SAM 05.1-06.1  Global Fixed Income: Incorporation of Environmental, Social and Governance (ESG) 
Manager Questionnaire 

Consistent with CalPERS commitment to the UN PRI, Global Fixed Income (GFI) seeks to gain a clear understanding of the ESG risks and opportunities affecting our portfolios and how our managers, internal and external, are addressing them.   This questionnaire is meant to aid in the assessment of each manager’s process to incorporate ESG related risks into their portfolio management process. 

1)	Is your firm a signatory to the UNPRI (United Nations Principles for Responsible Investment)?
       Yes
       No

2)	If so, …
a)	How is your firm working toward integrating the principles across all asset classes at your firm?
b)	Does your Firm have a stated policy or framework on integrating ESG factors into your investment decision-making process? 
                Yes                If so, describe….
                No 
c)	Provide a copy of your firm’s latest UNPRI survey results. 

3)	What Firm resources are dedicated to ESG integration? 
a)	Is there a Firm-wide working group?
 Yes	Who is represented in working group?
 No
b)	What is the stated purpose of the working group, (i.e., to discuss ESG implementation strategies, industry best practices and high level ESG strategic items)?

4)	Are you using any vendors to provide data to assess specific risks within Environment, Social and Governance categories?   If so, what data providers (i.e. MSCI, Sustainalytics, etc.) 


Listed Equity: CalPERS utilizes MSCI ESG as its assessment tool and has developed specific reports used to measure  the exposure of each portfolio to various ESG factors. There are no minimal standards. Information is used to track integration efforts by external managers and to initiate discussions with managers on owned controversial companies.

In 2017-18, CalPERS completed carbon footprinting of both the public equity and fixed income portfolios.
        

SAM 06. Monitoring on active ownership (listed equity/fixed income)

06.1. When monitoring managers, indicate which of the following active ownership information your organisation typically reviews and evaluates from the investment manager in meetings/calls

Engagement

Report on engagements undertaken (summary with metrics, themes, issues, sectors or similar)

Report on engagement ESG impacts (outcomes, progress made against objectives and examples)

Information on any escalation strategy taken after initial unsuccessful dialogue

Alignment with any eventual engagement programme done internally

Information on the engagement activities’ impact on investment decisions

Other RI considerations relating to engagement in investment management agreements; specify

None of the above

LE

Report on engagements undertaken (summary with metrics, themes, issues, sectors or similar)
Report on engagement ESG impacts (outcomes, progress made against objectives and examples)
Information on any escalation strategy taken after initial unsuccessful dialogue
Alignment with any eventual engagement programme done internally
Information on the engagement activities’ impact on investment decisions
Other RI considerations relating to engagement in investment management agreements; specify
None of the above

If you select any 'Other' option(s), specify

Global Equity: CalPERS internally manages its engagement efforts and retains control of CalPERS voting rights. CalPERS may collaborate with external managers if the manager has performed fundamental research that they are willing to share.


SAM 07. Percentage of (proxy) votes

07.2. For the listed equities for which you have given your external managers a mandate to engage on your behalf, indicate the approximate percentage (+/- 5%) of companies that were engaged with during the reporting year.

1814 Number of companies engaged
18 Proportion (to the nearest 5%)

07.3. Additional information [OPTIONAL]

          All engagements are conducted by internal staff based on prioritized initiatives as identified by CalPERS Investment Committee and senior staff.
        

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