(Bloomberg) -- The public battle between the largest U.S. pension — California Public Employees’ Retirement System — and Exxon Mobil Corp. may be just the beginning.
Situations like these present “huge opportunities” for Calpers and others to “take those more courageous positions,” said Marcie Frost, Calpers’ chief executive officer at the Investment Diversity Exchange conference on Friday.
While it’s time consuming, Frost says it’s time to think about these efforts differently. “If we don’t do this, who’s gonna step in and say that’s a foul ball,” she said at Tide Spark, the diversity and inclusion-focused conference held in Dana Point, California.
Calpers, which managed $503 billion as of June, has been publicly sparring with Exxon after the oil giant sued two climate-focused investors earlier this year, alleging they abused the shareholder-proposal process. In May, Calpers voted against all sitting members of Exxon’s board of directors, including its CEO.
Calpers and other socially minded shareholders say Exxon’s litigious steps will have a chilling effect on investors looking to raise legitimate concerns about climate change and corporate governance. But Exxon says allowing proposals that have repeatedly failed undermines the process. It says the sponsors of such proposals are activists seeking publicity. A federal judge ultimately dismissed Exxon’s lawsuit against Arjuna Capital.
Calpers also recently partnered with the FTSE Russell to create a new climate transition index, which tracks companies shifting to a green economy. The pension has invested $5 billion in the stocks of that index.
“The one thing that we’ve said in our plan is that we are going to invest in brown assets that have a commitment to go green,” Frost said. While that means the overall emissions of the fund’s holdings will likely rise in the short term, the focus is on the longer term, she said.
Engaging with companies is a key part of this investment approach and that depends on having access to reliable data, Frost said.
“We need to understand how an Exxon, a Chevron and Alaska Airlines, how are they looking at this?” she said. “One: Do they make a commitment? Two: Do they have the ability to measure it? And three: Will they be transparent about it with us?”
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