Investment firm CalSTRS assigns a manager for a $450 million mandate focused on sustainable equity.

The California State Teachers' Retirement System (CalSTRS) has announced a new partnership with Nordea Asset Management (NAM) to manage a $450 million global equity mandate, furthering its efforts to address climate change and reduce carbon emissions.

Kirsty Jenkinson, investment director at CalSTRS, stated that the sustainability-focused approach of NAM's Global Stars Equity Strategy aligns closely with the mandate of the Sustainable Investment and Stewardship Strategies (SISS) portfolio. The SISS portfolio, which currently accounts for around 3% of the pension fund's portfolio, is set to grow to 5% with this new partnership.

One of the key initiatives included in this broader effort is the Oil and Gas Methane 2.0 Partnership, a framework to reduce global methane emissions. CalSTRS has encouraged companies such as Eni, Equinor, ExxonMobil, Occidental Petroleum, and Phillips 66 to join the partnership in collaboration with NAM. Members of the Oil and Gas Methane 2.0 Partnership commit to setting methane emissions targets of a 45% reduction by 2025 and 60-75% by 2030.

CalSTRS has also allocated approximately $2 billion from its $3 billion allocation for climate solutions in unlisted markets. The expansion of the SISS portfolio will incorporate more sustainable private market investments.

The Global Stars Equity Strategy, under which the investments are managed, incorporates environmental, social, and governance risk factors. The strategy offers an immediate reduction in carbon emissions relative to a benchmark investment, with the current carbon footprint of the Global Stars Equity Strategy being 61% below the MSCI ACWI benchmark.

This partnership is not limited to the global equity mandate, but also includes an engagement initiative to encourage investee companies to join the Oil and Gas Methane 2.0 Partnership. CalSTRS and NAM have collaborated on this engagement initiative, aiming to encourage companies to take action in reducing their carbon emissions and contributing to a more sustainable future.

CalSTRS' commitment to sustainable investing and reducing carbon emissions is evident in its approach to its investment strategies. The investments made under the Global Stars Equity Strategy are part of this commitment, aligning with a net zero goal.

In conclusion, CalSTRS' partnership with Nordea Asset Management is a significant step forward in its efforts to address climate change and reduce carbon emissions. The partnership will enable CalSTRS to make more sustainable investments, encouraging companies to join initiatives such as the Oil and Gas Methane 2.0 Partnership and take action in reducing their carbon footprint.

Investment firm CalSTRS assigns a manager for a $450 million mandate focused on sustainable equity.