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In preparation for its March 13 Investment Committee meeting, CalPERS released its "Proxy Voting and Corporate Engagements Update," which highlights its progress and plans vis-a-vis portfolio companies on executive compensation, board diversity, climate change, and investor rights.

Executive Compensation

• Focus engagement on relative underperformers with continual higher relative pay
• Continue to withhold votes from directors at companies with poor pay practices

Corporate Board Diversity

• Continue to engage on board diversity in the context of proper succession planning, which may include filing shareowner proposals where engagement efforts stall, and other campaigns

Climate Change

• Expand universe beyond the CA100+ to highest 350 emitting companies in portfolio

Investor Rights

• Continue to engage companies to adopt proxy access and majority voting

With regard to climate specifically, the update indicates that CalPERS will extend its climate-related director accountability criteria for Climate Action 100+ companies considered in 2022 to additional high emitting companies. The 350 highest emitting companies purportedly represent 85% of its portfolio’s Scope 1 and 2 emissions and more than 50% of its Scope 3 emissions.

According to its 2023 Proxy Voting Guidelines, CalPERS will withhold votes from relevant committee members (and/or board leadership) who serve on a board that demonstrated a lack of board oversight related to climate-related risks and may consider the Climate Action 100+ Net Zero Company Benchmark to inform its decision-making. It voted against 95 directors at 26 Climate Action 100+ companies in the 2022 proxy season based on climate risk oversight concerns.

See CalPERS’ key initiatives and associated proxy voting strategies, engagement activities, and voting trends; these articles: “CalPERS calls on 350 companies to reduce emissions, doubling list” (Pensions & Investments) and “CalPERS opposed 95 directors at CA100+ firms last year” (Responsible Investor); and additional resources on our Institutional Investors page.

            This post first appeared in the weekly Society Alert!