The California Public Employees’ Retirement System is preparing to scale up its sustainable investment program over the next five years, with plans to increase allocations to climate solutions, expand its ranks of emerging and diverse managers, and include labor and environmental, social, and governance analyses within its portfolio.
The strategy, detailed in its latest Sustainable Investments Annual Program Review, places execution at the center of the next phase of work as the system navigates a shifting climate and policy environment.
The fund lifted its climate-solutions exposure to $59.7B as of June 2025, up from $50B the year before and $47B in 2023, helped by market appreciation and more than $7B in new commitments to climate-dedicated private funds since late 2023. Its Climate Transition Index strategy reached $5.8B and performed broadly in line with its cap-weighted benchmark. CalPERS said climate remains a global “mega-trend,” with acceleration in India, China, and Europe even as U.S. progress remains mixed across technologies.
In a review, investment consultant Wilshire stated that CalPERS has already built the internal foundation for its plan to deploy $100B into climate solutions by 2030, citing cross-asset-class roadmaps developed over the past two fiscal years.
“Buy-in was strong and broad-based from the asset classes,” noted the consultant in a document that was included in the meeting packet. The Sustainable Investments (SI) Private Markets team is now fully staffed. CalPERS’ ability to evaluate climate opportunities “is enhanced.”
CalPERS said it has achieved full ESG integration for new investments and is developing a private markets integration roadmap. A central focus in the year ahead will be implementation of its Labor Principles Scoring Framework, which applies CalPERS’ labor principles through pre-investment and monitoring key performance indicators. Additionally, Wilshire described the adoption of the labor principles and the refresh of the Responsible Contractor Policy as “critically important advances,” and said it expects CalPERS to prioritize the new Labor Principles Accountability Framework in the coming year.
CalPERS reported an 11% reduction in portfolio emissions intensity and a slight decline in absolute emissions to 19.7M tCO₂e. Its holdings remain aligned with a 2.7°C trajectory. Wilshire encouraged the system to strengthen its climate-risk analytics, noting CalPERS is securing a new data provider that will expand private market coverage and improve materiality assessments.
As well, the fund reported that it allocated $7.3B to diverse managers and $2.2B to emerging managers in fiscal year 2024–25, bringing total new commitments to $21B since 2022. A review conducted by Wilshire found “a strong and evolving commitment” to the space, citing high participation in CalPERS’ diversity, equity, and inclusion survey and continued buildout of its emerging manager program.
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