The $178 billion CalPERS is considering inflation-linked assets, such as the water bonds issued by the World Bank, as part of an over-riding view to allocate capital to climate change initiatives.
Newly appointed portfolio manager, Anne Simpson, said the fund had also recently made a decision to increase to 2 per cent the allocation to environmentally-friendly global equities funds managers.
CalPERS has also been progressive in allocating to climate change initiatives in private equity and property, including energy efficient and recycled materials, and now she said the focus would be on the bond portfolio.
“I congratulate CalPERS on its work so far, and its collaborative effort with other funds around the globe,” she said. “Now I want to look at what we can do in the bond portfolio, we need to do more.”
Simpson, who has only been at CalPERS for six weeks, is charged with overseeing the fund’s focus list program, which involves monitoring portfolio companies’ performance related to finance, corporate governance practices and CalPERS’ strategic issues.
She was formerly the executive director of the International Corproate Governance Network, and was speaking at its recent annual conference, where she said investors needed to consider climate change investments across all asset classes not just equities.
In allocating capital to climate change initiatives, she said insitutional investors need to not only be innovative but ensure there is enough scale do to it.
She also urged the investing community to develop a tool kit for dealing with funds management fees and the alignment of interests, citing the incentives through the food chain of investment as contributing to short termism.