On April 25th, The California Senate Public Employment and Retirement Committee passed Senate bill 560 (SB -560) requesting CalPERS and CalSTRS, the two largest public pension funds in the US, to report annually on “the financial climate risks of [their] investments, including the alignment of [their] portfolios with the Paris Climate Agreement and California climate policy goals, the value at risk if these goals are achieved, and the exposure of the portfolios to long-term risks.”
This was a critical first step for the bill, which must pass both houses of the state legislature before it can become law by September this year.
The first version of the bill that requested disclosure of the carbon footprint of portfolios, as recommended by the draft report of the TCFD, faced pushback from the pension funds over several issues. The reporting requirements in the version passed on Tuesday were directly inspired from the French Article 173, findings from the International Award on Investor Climate Disclosures, and 2° Investing Initiative’s response to the TCFD consultation.
Senator Ben Allen, who introduced the bill, was supported at this first hearing by Philippe Desfossées, CEO of the French public pension funds ERAFP and Chris Weber from 2Dii, who both testified in front of the Senate committee (see video here). He also benefited from the support of the French insurer and climate disclosure award winner AXA, that shared its report showcasing the application of Article 173 and SB 560.
The bill is sponsored and supported by a number of environmental organizations, including the Center for International Environmental Law (CIEL), DivestInvest Network, Fossil Free California, Environment California, and 350.org groups in California.
The bill still needs to pass additional committees and floor votes in both the state Senate and Assembly before it goes to Governor Jerry Brown for signature. If you would like to share your experiences or views on the issue with California legislators directly, or by co-signing op-eds, please get in touch with Chris Weber at [email protected].