Real Estate, Public Equities Boost CalPERS' Climate Investments to $60B

Led by its real estate and public equity investments, the California Public Employees’ Retirement System’s climate-related assets have grown to almost $60 billion as of the end of June. This is up from $53 billion the same time one year earlier and from $47 billion in November 2023, when the $589 billion pension giant launched its Climate Action Plan.

Real estate and public equity combine to account for approximately 73% of the $59.7 billion in total climate assets, with $23.4 billion worth of climate-related public equities and $19.9 billion worth of real estate investments. Those were followed by infrastructure and fixed-income assets, at $7.2 billion and $6.2 billion, respectively, while private equity and private debt accounted for $2.8 billion and $0.2 billion, respectively.

CalPERS attributed the increase in asset value to both appreciation and new climate-related investments. Its climate-related investment strategy aims to minimize climate-related financial risks by allocating to funds intended to improve energy efficiency and support the reduction of greenhouse gas emissions.

“In just two years, CalPERS has seen significant growth in its Climate Action Plan, growth that is driven by the energy transition,” CalPERS CEO Marcie Frost said in a statement. “Climate is a key mega-trend and CalPERS is committed to leading the way and finding the best investments on behalf of our members.”

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According to CalPERS, it has made commitments within its private markets portfolio to 13 climate funds that focus on renewable energy, energy optimization software, drought resistant crops, wildfire suppression, electric vehicle charging networks, reusable packaging containers and battery storage.

The funds in which CalPERS has invested since June 2024 include private equity firm TPG’s climate strategy, TPG Rise Climate’s private equity and infrastructure funds, and Goldman Sachs Asset Management’s West Street Climate Credit, a private credit strategy that provides financing for climate and environment related businesses.

The pension fund also made commitments to the Generation IM Sustainable Private Equity Fund II; B Capital Climate Fund; Copenhagen Infrastructure Partners V USD Feeder special limited partnership; and Brookfield Global Transition Fund II-B, among others.

CalPERS did not disclose how much it committed to the 13 funds.

“The opportunities before us cut across all industries and sectors, and we believe that sound, long-term commitment to climate solutions will deliver results for our members,” CalPERS CIO Stephen Gilmore said in a statement. “The global demand for energy will continue to grow and CalPERS is providing the capital necessary to meet the needs that the world will have to power homes, cars and technology, such as artificial intelligence.”