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California Public Employees' Retirement System CalPERS

PRI reporting framework 2019

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Engagement

LEA 02. Reasoning for interaction on ESG issues

Indicate the method of engagement, giving reasons for the interaction.

Type of engagement

Reason for interaction

Individual / Internal staff engagements
Collaborative engagements
Service provider engagements

02.4. Additional information. [Optional]


LEA 03. Process for identifying and prioritising engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.

03.1. Indicate whether your organisation has a formal process for identifying and prioritising engagements.

Indicate the criteria used to identify and prioritise engagements for each type of engagement.
Type of engagement
Criteria used to identify/prioritise engagements
Individual / Internal engagements

Internal / Individual engagements

Collaborative engagements

Collaborative engagements

03.3. Additional information. [Optional]

In considering whether to engage on issues raised by stakeholders, CalPERS uses the following prioritization framework (Investment Belief #3):

  • Principles and Policy – to what extent is the issue supported by CalPERS Investment Beliefs, Governance and Sustainability Priniciples or other Investment Policy?
  • Materiality – does the issue have the potential for an impact on portfolio risk or return?
  • Definition and Likelihood of Success – is success likely, in that CalPERS' action will influence an outcome which can be measured? Can we partner with others to achieve success or would someone else be more suited to carry the issue?
  • Capacity – does CalPERS have the expertise, resources and standing to influence an outcome? 

LEA 04. Objectives for engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.
Indicate whether you define specific objectives for your organisation’s engagement activities.
Individual / Internal engagements
Collaborative engagements

04.2. Additional information. [Optional]

CalPERS engages companies for various reasons and have identified specific objectives to ensure each engagement is productive, efficient, and meets the needs of CalPERS. From a broad perspective, CalPERS wishes to communicate its thoughts on governance (e.g., board independence, majority vote, executive compensation, etc.), environmental, and social best practices to ensure companies understand our expectations.

When engaging on a specific topic, CalPERS researches the company to understand how the issue may impact their business operations and will develop specific objectives to ensure the engagement is productive, efficient, and meets the needs of CalPERS.


LEA 05. Process for identifying and prioritising collaborative engagement

Indicate if you monitor and/or review engagement outcomes.
Individual / Internal engagements
Collaborative engagements
Indicate if you do any of the following to monitor and review the progress of engagement activities.
Individual / Internal staff engagements
Collaborative engagements

05.3. Additional information [Optional]


LEA 06. Role in engagement process

06.1. Indicate whether your organisation has an escalation strategy when engagements are unsuccessful.

06.2. Indicate the escalation strategies used at your organisation following unsuccessful engagements.

06.3. Additional information. [Optional]

CalPERS is a long-term investor and believes that the best way to initiate positive change at investment companies is to seek agreement through engagement. There are times when that strategy is not effective and CalPERS will seek other options only engagement is no longer viable or productive. 

As fiduciaries, CalPERS' duty is to its members and their beneficiaries. We have a responsibility to act solely in the interest of, and for the exclusive purpose of providing benefits. Divestment minimizes our investment universe and thus limits are ability to meet our rate of return, which is in direct conflict with our fiduciary duty.  


LEA 07. Share insights from engagements with internal/external managers

07.1. Indicate whether insights gained from your organisation's engagements are shared with investment decision-makers.

Type of engagement

Insights shared

Individual / Internal staff engagements

Collaborative engagements

07.2. Indicate the practices used to ensure information and insights collected through engagements are shared with investment decision-makers.

07.3. Indicate whether insights gained from your organisation’s engagements are shared with your clients/beneficiaries.

Type of engagement

Insights shared

Individual/Internal staff engagements

Collaborative engagements

07.4. Additional information. [Optional]

CalPERS has a strict practice of confidentiality surrounding corporate engagements. On an as-needed basis, staff will communicate matters of importance with internal and external managers. 


LEA 08. Tracking number of engagements

08.1. Indicate if you track the number of your engagement activities.

Type of engagement
Tracking engagements

Individual / Internal staff engagements

Collaborative engagements

08.2. Additional information. [OPTIONAL]

Engagements are logged and archived in a centralized database for all team members to review.  Internal research is used to inform future engagement and voting activities. 

CalPERS tracks progress on Total Fund Governance and Sustainability Strategic Plan, which include associated timelines and KPIs. The plan is delineated into "core" and "strategic" work and focuses on:

  • Data and Corporate Reporting Standards
  • Engage Climate Action 100+ Companies
  • Diversity and Inclusion
  • Manager Expectations
  • Research
  • Private Equity Fee and Profit Sharing Transparency.

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