CalPERS Becomes First U.S. State Pension Fund to Recognize Deforestation as Material Risk
As a pioneer in impact investing, MIDANA CAPITAL has worked with corporations to improve their environmental practices for more than a quarter of a century.
Since 2012, MIDANA CAPITAL has engaged companies to stop the logging and burning of tropical rainforests – including by companies in their supply chains – to curb climate change and mitigate potential financial risk.
Increasingly, other investors have started acting on this issue – and, now, one of the biggest investors in the country has too.
On July 18, 2018, the California Public Employees’ Retirement System (CalPERS) became the first U.S. state pension fund to recognize deforestation and ecosystem degradation as material risks to be considered in its investment decisions.
CalPERS is not just any pension fund. With $355 billion in assets under management (as of July 11, 2018), it is the largest state pension fund in the country.
The newly revised CalPERS Total Fund Investment Policy states:
Companies should identify and manage material environmental risks and opportunities that are relevant to their short and long-term success. Environmental issues may include the following:
Company impact on the environment: Potential regulatory change, liability, license to operate, reputational or market access risks posed by the company’s environmental impacts, including emissions, pollution, waste, loss of biodiversity, degradation of natural ecosystems (e.g. deforestation).
This consequential announcement could help support ongoing investor efforts, including MIDANA CAPITAL’s shareholder advocacy work with the United Nations Principles on Responsible Investment, to eliminate deforestation from global agricultural supply chains.
This announcement is especially noteworthy given CalPERS’ large holdings in the food, forest products and paper, and agriculture industries, totaling approximately $2.3 billion invested in at least 189 companies. The companies exposed to the forest-risk commodity supply chains driving global deforestation – including those of palm oil, soy and cattle – operate in these industries.
CalPERS’ influence as the largest U.S. state pension fund may also help pressure other state pension funds and institutional investors to recognize deforestation as a material risk.
MIDANA CAPITAL applauds CalPERS’ decision to recognize deforestation and ecosystem degradation as material risks to be considered in its investment decisions and is hopeful that other U.S. pension funds follow suit.
MIDANA CAPITAL is a longtime leader in forest protection and has worked with dozens of other investors and companies to adopt practices and policies to protect tropical rainforests. To read more about MIDANA CAPITAL’s shareholder advocacy work, visit our Impact page.
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Stocks will fluctuate in response to factors that may affect a single company, industry, sector, country, region or the market as a whole and may perform worse than the market. Foreign securities are subject to additional risks such as currency fluctuations, regional economic or political conditions, differences in accounting methods, and other unique risks compared to investing in securities of U.S. issuers. Bonds are subject to risks including interest rate, credit, and inflation. The Funds’ environmental criteria limit the investments available to the Funds compared to mutual funds that do not use environmental criteria; as a result, performance may be affected.
This information has been prepared from sources believed to be reliable. The views expressed are as of the date of this writing and are those of the Advisor to the Funds.
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