Becoming a sustainable organisation is one of three pillars in CalSTRS’ new five-year strategic plan, as it also reveals progress on its net zero plan.
Presented to the board in March, the $312 billion fund’s 2022-25 strategic plan includes 10-year vision for the future broken down into three, three-yearly strategic plan cycles, kicking off in July 2022.
The plan is centred around three core pillars: being trusted stewards to ensure a well-governed, financially sound trust fund; leading innovation and managing change, including innovation to grow resiliency and efficiency; and focus on a sustainable organisation, including fully integrating a unified ESG ethos in everything it does. The latter includes investments but also a focus on internal diversity, equity and inclusion to drive organisational outperformance.
Many of the new priorities are a continuation and advancement of the current strategic plan including operationalising sustainable investment beliefs to create long-term value, execute on the CalSTRS Collaborative Model 2.0 and a focus on advanced technology for business agility and to increase efficiency while transforming business processes and digital adoption. The Collaborative Model focuses on managing more assets internally to reduce costs, control risks, increase expected returns and leverage external partnerships. Since 2017 this has saved the fund more than $780 million.
Some of the objectives of the previous strategic plan, which finishes at the end of June this year, will be carried over into the new plan including achieving full funding of the defined benefit program by June 30, 2046; integrating the fund’s sustainable investment and stewardship strategies; implementing the collaborative model leveraging all of CalSTRS resources; and a focus on technology to reduce costs.
In September 2021 the fund pledged to a net zero portfolio by 2050 or sooner but has invested in climate-oriented solutions and integrated climate risk considerations into its investment and stewardship activities since 2004.
When it made the pledge it also outlined that it would take a year to figure out the plan for implementation.
In February CalSTRS released its eighth annual Sustainability Report which shows it is evaluating its internal policies and practices for greenhouse gas emissions in line with its portfolio commitment. This includes business travel, remote work and onsite energy use.
The fund is expanding its West Sacramento headquarters with a new 10-story tower. The project is being financed through tax-exempt, lease-revenue green bonds issued through the California Infrastructure and Economic Development Bank.
CalSTRS head of sustainability, Kirsty Jenkinson, is one of the speakers at the Sustainability in Practice event to be held at the University of Cambridge from April 19-21. If you are an asset owner and would like more information on attending visit us here.