“Climate risk management is a signature issue in our corporate governance program.”
Jack Ehnes, CEO, CalSTRS
CalSTRS’ board has made climate risk management a signature issue in its corporate governance program for the past few years and is working to improve its portfolio companies’ climate risk awareness and management.
CDP data is an essential input into CalSTRS’ corporate governance engagement efforts to enhance shareholder value. Brian Rice at CalSTRS explains: “CDP data is reviewed prior to meeting with companies on any issue to ensure that the discussion covers climate risk if warranted. CDP is a valuable source of data that helps identify which companies are adequately measuring their carbon footprints. We depend on the credible data to inform our proxy voting and as a screen for our performance based focus list that we undertake each year.”
In 2008 and 2009 CalSTRS sent letters to many of the companies that had not responded to the CDP questionnaire to advise them of the importance of climate risk management and requested that they reconsider their decision to not respond. CalSTRS continually uses the CDP data to determine which CDP non-responders or poor responders are most appropriate for further engagement.
One area of clear progress is the growing use of climate related shareholder resolutions. CalSTRS strongly believes that this is an important tool for investors to use as an engagement strategy, and CDP data is essential to the company as it develops and executes its shareholder resolutions.
Brian Rice concludes: “CalSTRS strongly encourages all investors to actively manage the climate risk exposure in their portfolios. We endorse the work of the CDP and find it to be one of the most important tools available for managing climate risk.”