CalSTRS votes against 2,035 boards for inadequate climate risk disclosures 

August 18th, 2023

The California State Teachers’ Retirement System (CalSTRS) escalated its efforts to hold global companies to account after they did not provide sufficient climate risk disclosures to accurately assess emissions.

The world’s largest educator-only pension fund, which holds more than $315 billion in assets, voted against the boards of directors at a record 2,035 global companies in the 2023 proxy voting season.

Aeisha Mastagni, a portfolio manager on CalSTRS’ sustainable investment and stewardship strategies team, said: “We voted against boards that didn’t meet the most basic disclosure expectations. These public disclosures are an important step toward reaching net zero because companies cannot be held accountable for reducing their greenhouse gas emissions without them.”

The organization pledged in 2021 to achieve a net zero portfolio by 2050 or sooner, aligning with the science-based targets of the Paris Agreement.

The organization voted against the boards of directors of companies in a range of industries including steel producers, transportation companies and metal and mining companies. The risk of climate change impacts shareholders’ investment portfolios across the board, which is why shareholders’ right to vote against a company’s board of directors is so crucial.

While there are no globally mandated rules for climate risk disclosures, the Task Force on Climate-Related Financial Disclosures (TCFD) has published guidance for companies on good practice for disclosures.

CalSTRS stated that it expected its portfolio companies to report their direct greenhouse gas (GHG) emissions (also known as scope 1 emissions), indirect emissions (scope 2), and climate reports in line with TCFD guidance “at a minimum”.

The organization also predicts that mandatory disclosure requirements are “on the horizon” and will soon be introduced in the US. In February, SEC chairman Gary Gensler admitted “adjustments” could be made to the ‘Enhancement and Standardization of Climate-Related Disclosures for Investors’ rules, which were proposed last year.