No better example of the impact exists than the blackouts that cascaded through our state last fall. Pacific Gas & Electric, the state’s largest for-profit utility, cut power to millions of customers to prevent a repeat of the state’s 2018 firestorms. I’m not here to cast blame, but the conditions that enabled wildfires to spread so rapidly and dangerously can largely be tied directly to the weather.
These tragedies that took lives and destroyed so much property go far beyond environmental protection and public safety. The wildfires propelled PG&E into bankruptcy, sinking its stock price and costing investors millions. A real casualty of this financial disaster are pension funds like CalPERS, which need solid investment returns to fund the retirement income our members count on. For many, it’s not about getting rich. It’s about getting by.
The good news is that the public employees who serve communities across the Golden State, including our first responders who heroically fought the fires and helped save lives, are playing a leadership role and making a positive impact to improve the global environment, the economy, and, in the process, their retirement savings. Firefighters, police officers, nurses, physicians, engineers, and other professionals are your family, friends, and neighbors—and our members. It’s important to their future, and to those already enjoying retirement, that we take an active role in getting companies to fully address the risk that a changing climate presents to their financial bottom line.
Why? Because 58 cents of every single dollar we pay out in pension benefits comes from what we earn on our investments. The ability to meet those retirement obligations requires consistent risk-adjusted returns. We invest billions of dollars seeking to maximize returns, not for Wall Street, but to help you build a financial foundation in retirement. With over $380 billion in assets under management, we use our size and financial muscle to form partnerships that will create a global economy that is more prosperous and sustainable, and benefits both entrepreneurs and their employees.
That’s why we are an active member of several global coalitions of investors that work with corporations to quicken the pace to a low-carbon economy. Last year, for example, we joined Secretary-General António Guterres at the United Nations as a member of the Global Investors for Sustainable Development Alliance. The goal of this group of 30 large global investors is to foster sustainable growth by stimulating investment and creating long-term value in companies throughout the world.
Our long-term strategy is to reduce investment risk caused by a changing climate and help ensure investment returns meet member pension obligations. We want to be a reliable partner, investing time, expertise, and energy to lead in a positive way.
The foundation of our work—the North Star of all our objectives—is built around achieving our 7% annual return target. That’s our reason for joining with groups advocating for the creation of strong and stable economies around the world. And it’s why we decided to help create Climate Action 100+, a global network of investors worth more than $35 trillion, to drive down greenhouse gas emissions by engaging with the world’s largest corporate emitters.
We’ve taken these steps because we have a fiduciary responsibility to our members and California taxpayers. We will continue to use our financial strength to influence businesses to be more transparent and sustainable, reducing the risks to economic prosperity posed by greenhouse gas emissions. We need the companies we invest in to thrive. When they do, we do.
CalPERS is a leader respected around the world. We must be part of this historic effort to help companies meet the challenges ahead so that we can pay for the benefits you—our members—have earned.