CalPERS Flexes its Proxy Muscles

$330 billion system boasts about its influence on corporate governance of public companies.

The California Public Employees’ Retirement System (CalPERS), with its $330 billion invested in more than 10,000 public companies, is again using its voting rights to effect changes that reflect its policies and principles during proxy season. 

The US’s largest public pension fund said it used its major influence on operations and corporate governance of companies so far this year, to bring them in line with CalPERS’ governance and sustainability principles, pension beliefs, and environmental, social, and governance strategic plan.

“We saw progress with victories in climate risk reporting and proxy access, which are main themes in our ESG Strategic Plan,” said Ted Eliopolous, CalPERS’ CIO. “The first step is to win the vote. Now, we will be engaging with these companies to ensure that they follow through with their responsibilities to their shareholders.”

According to CalPERS’ governance and sustainability principles, the system’s principles have evolved from a guide to proxy voting in public markets, to a broader statement of its views on best practices.

“As the governance and sustainability agenda has developed, so too have the CalPERS Principles,” says CalPERS. “An important area of development has been integrating consideration of environmental and social factors alongside our governance agenda.”

CalPERS said they demanded the implementation of climate risk reporting at major oil companies, including Occidental Petroleum, PPL, and ExxonMobil. The system also ran proxy solicitations at another 13 companies. According to CalPERS, the average level of shareowner support for shareholder proposals that went to vote in 2017 was 45%, up from 34% in 2016.

Among its proxy achievements in 2017, CalPERS helped pass resolutions at oil companies ExxonMobil and Occidental Petroleum that requires them to report on environmental risks and opportunities associated with climate change.  It also helped pass a proposal at Old Republic International Corporation that gave shareowners the right to nominate directors to the company’s board.

“We believe engagement is an important part of being a responsible shareowner,” said Anne Simpson, CalPERS investment director, sustainability. “Our intent is to create long-term sustainable value that will benefit the companies and our members.”


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