California Proposes $1.5 Billion Investment in Clean Technology

California Proposes $1.5 Billion Investment in Clean Technology

California State Treasurer Phil Angelides on Tuesday launched a landmark environmental “Green Wave” initiative to bolster financial returns, create jobs and clean up the environment.

The four-pronged initiative calls on the State’s two large public pension funds -- the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) -- to marry the jet stream of finance and capital markets with public purpose by committing $1.5 billion to investments in cutting- edge technologies and environmentally responsible companies. The goal of the initiative is to improve long-term financial returns for pensioners and taxpayers through investments in the burgeoning environmental technology sector, while also reducing the risks to the pension funds posed by corporate environmental liabilities.

“Now is the time for California to catch the ‘Green Wave’ of smart, environmental investments and responsible corporate environmental leadership,” Angelides -- who sits on the boards of both CalPERS and CalSTRS -- said at a news conference here at Nanosolar Inc., a maker of cutting-edge, lightweight plastic solar cells. “The environmental technology sector is expanding rapidly in response to the growing worldwide need for clean water, efficient energy sources, and other sustainable environmental solutions.

“We need to move forward now,” the Treasurer added, “so California and our pension funds can capture this economic growth and create jobs, while at the same time clearing the air, land and water of pollutants through advanced solutions to our environmental challenges.”

The Treasurer’s Green Wave initiative calls on CalPERS and CalSTRS -- the nation’s largest and third largest public pension funds, with combined assets of $250 billion -- to implement the following four-pronged plan:

  • Demand Environmental Accountability and Disclosure. Using their financial clout in the marketplace, and building on their track record of corporate governance leadership, CalPERS and CalSTRS would prod corporations to provide meaningful, consistent and robust reporting of their environmental practices, risks and potential liabilities. Through a new environmental governance program, CalPERS and CalSTRS would encourage companies -- through dialogue, shareholder resolutions and other actions -- to improve their environmental operations and reduce their environmental risks and liabilities.

    As part of this effort, California’s pension funds would also join with other major U.S. investors to urge more comprehensive corporate reporting of environmental practices and liabilities. The coalition’s effort would include such actions as urging the Securities and Exchange Commission to strengthen environmental disclosure rules, and seeking corporate reporting on such critical financial factors as climate risk assessment and global warming. “Shareholders need to know if the companies they own are going down the prudent path, by adopting environmental practices that will enable them to survive and thrive in a world of increasing environmental concern and regulation,” Angelides said. “Or, whether those companies are taking the path of denial, risk, liability and cost.”

  • Target Private Investment in Environmental Technologies. Urge CalPERS and CalSTRS to invest a combined $500 million in private equity investments, venture capital, and project financing to develop "clean" technologies that can provide the pension funds with positive, long-term returns, and that can create jobs and economic growth in California in the years ahead. Across the globe, demographic trends, public awareness, environmental crises and increased regulation and public policy attention are driving growth in the clean technology industry. Riding this “Green Wave” of technological innovation will allow CalPERS and CalSTRS to help build an industry critical to the State and nation, while earning those positive returns for pensioners and taxpayers and addressing environmental problems.

  • Invest in Stocks of Environmentally Responsible Companies. Urge CalPERS and CalSTRS to invest a combined $1 billion of their stock portfolios into environmentally screened funds through leading active public equity investment managers with proven track records. An increasing number of recent investment research studies have shown that environmentally screened funds are out-performing their non-screened counterparts. Investing in such funds will not only provide CalPERS and CalSTRS with the opportunity for enhanced financial returns, but will also send a strong signal to corporations about the added value of responsible, forward-looking environmental practices. Under this proposal, the performance of any manager selected must equal or exceed that of the funds’ existing, active managers.

  • Audit real estate portfolios to boost long-term value. Call on CalPERS and CalSTRS to undertake a comprehensive audit of their respective real estate investments to determine whether the investments are maximizing their opportunities to use clean energy, energy efficiency and green building standards and practices that reduce long-term costs and boost long-term value.

    Angelides said the Green Wave initiative is an outgrowth of a yearlong series of roundtable discussions with environmental technology and financial leaders across the nation, and the Institutional Investor Summit on Climate Risk held last November at the United Nations in New York, presented by CERES, a national coalition of investment funds, environmental organizations and public interest groups. The Treasurer was a speaker at the meeting.