TheCorporateCounsel.net

In a decisive move that it previewed earlier this year, the California State Teachers’ Retirement System recently announced that it voted against the boards of directors at a record 2,258 companies this past proxy season – which is up from a then-record of 2,035 companies in 2023. This is out of about 10,000 meetings globally.

Although many companies have paused (or at least not accelerated) efforts on climate disclosure while we wait out litigation over the SEC’s rule, CalSTRS’ voting policies continue to matter because it is one of the largest pension funds in the world, with over $341 billion in assets. The pension fund articulates its expectations as follows:

CalSTRS expects all portfolio companies to accomplish the following, to help effectively manage the risks and opportunities associated with climate change:

– Publish a report on sustainability-related disclosures that aligns with the International Financial Reporting Standards, which took over the monitoring of companies’ progress on climate-related disclosures from the Task Force on Climate-related Financial Disclosure (TCFD).

– Disclose Scope 1 and Scope 2 greenhouse gas (GHG) emissions. Scope 1 emissions come from a company’s operations and Scope 2 emissions are from the generation of power a company uses.

In addition to the above disclosures, CalSTRS expects the highest global emitting companies on the Climate Action 100+ focus list and other high-emitting companies to also set appropriate targets to reduce GHG emissions, as this is an important step to reach a net zero portfolio by 2050 or sooner.

The press release says there has been improvement in methane emissions reporting over the past year, and that 10 companies have joined the Oil and Gas Methane Partnership 2.0 (OGMP 2.0), a United Nations-led framework committed to the measurement, reporting and mitigation of methane emissions, as a result of CalSTRS-led engagements.

Climate will continue to be a focus area for CalSTRS. More details can be found in its Path to net zero, Corporate Governance Principles and proxy voting records.

– Liz Dunshee