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The California Public Employees' Retirement System today announced its corporate engagement plans for 2018. High priority initiatives include board diversity and climate risk reporting.
As an engaged shareowner, CalPERS uses its proxy voting rights at about 11,000 companies to effect changes in line with its Investment Beliefs.
"We engage companies on issues that protect the long-term health of their business and thereby our investment," said Ted Eliopoulos, CalPERS chief investment officer. "Voting our proxies and keeping an open dialogue with businesses are part of our duties as a responsible shareowner."
One initiative this year is board diversity. Companies with diverse corporate boards have been shown to produce higher financial returns when compared to companies with limited or no diversity on their boards.
In 2017, CalPERS engaged more than 500 companies over the lack of women on their boards. This year, engagement will continue with companies that have not made an effort to improve. When necessary, votes will be withheld from directors at the company's annual general meeting.
In addition, CalPERS will continue its work to obtain climate risk reporting from companies. Reporting informs shareowners how a company plans to curb emissions and manage the risks it faces due to climate change and take advantage of opportunities.
CalPERS will advance this effort through the Climate Action 100+ initiative, a consortium of 256 investors representing $28 trillion in assets under management, and advocating for stronger climate-related financial disclosures.
"Detailed reporting from companies is a valuable tool for shareowners," said Simiso Nzima, CalPERS investment director for corporate governance. "These reports provide a more complete analysis of the risks and opportunities associated with our investments."
Other key initiatives this year include gaining proxy access on corporate boards, opposing executive compensation plans due to performance issues, and obtaining majority vote standard for board of director elections.
In 2017, CalPERS voted at over 11,000 companies worldwide. Notable wins included climate risk reporting at ExxonMobil, Occidental Petroleum, and PPL Corporation. CalPERS also won proxy access at Old Republic.
