CalPERS Wants More Diverse Boards

CalPERS, the largest U.S. pension fund with $240 billion in assets under management, announced its decision to add new guidelines regarding climate change disclosure and board diversity to its corporate governance program. These new guidelines are intended to get companies to disclose and act upon climate risks such as carbon emissions, which could lead to a reduced bottom line.

On board diversity, according to CalPERS spokesman Clark McKinley, “If all other factors are equal and there are two director candidates up for election to a company board, diversity could be the telling factor in which director Calpers supports.”

Board oversight, management accountability, executive compensation, emissions reporting and material risk disclosure are also to be analyzed. Some activists believe that the biggest risk to revenue is the lack of disclosure and awareness of climate change. 

CalPERS is also planning to push the proxy advisors they use, such as RiskMetrics Group, Glass Lewis, Proxy Governance and Egan-Jones, to adopt its policy on board diversity.

CalPERS’ board also supported a bill before the California Senate that would require the secretary of state to create climate change disclosure standards for publicly traded companies doing business in California.

Such standards suggest that companies volunteer greenhouse gas emissions information as well report actions taken by the board related to climate change. Regulatory risks analysis can support economic forecasting. Climate change initiatives are increasing as large funds are beginning to support climate change initiatives.