CalPERS chair and president Henry Jones has raised his own brushes with inequity and injustice  while discussing about how the largest pension fund in the United States is tackling these issues internally and through its investment allocations.

Jones talked of his own experiences including growing up in the segregated south and in more recent years being inappropriately stopped by police in LA during an in depth interview with Top1000Funds.

Jones discussed the role of the investment community in standing up and working together to shape a future which is just, equal, inclusive and deeply grounded in fundamental human and civil rights. The Jones interview is part of a series of in depth interviews in a new series entitled Sustainability in a crisis.

“This is both a moral imperative and economic necessity and corporate accountability is vital. We welcome the attention brought to this issue in business, and tracking racism,” Jones said, adding that CalPERS is undertaking a new research project to identify where to focus attention to make progress.

“Mapping racism as a systemic risk means we should track this across the portfolio, but right now we don’t have the tools or the data. It is not unlike where we were on climate as a systemic risk, we didn’t have the information and had to build a data model and action plan with our partners. We need to do that with addressing racism and have commissioned research on this.”

Jones said there is not currently enough information for investors to track issues of racism in their portfolios and argued that the Securities Investments Commission needs to enforce a disclosure framework at company level. In July the SEC held a special meeting to discuss the diversity of the asset management industry.

“We know that racism is not just an issue of employment practices in the companies we invest in. It shows up in lack of healthcare, affordable housing and decent education and leads to a vicious circle of depravation and inequality,” he said.

“Intersectionality is critical in how to make progress. There is no silver bullet. We would like to see institutions and cultures taking steps to alleviate these profound impacts on our people and society.”

CalPERS commitment to diversity is reflected in investment beliefs and in its strategic plan with engagement with companies and advocacy with regulators among the implementation techniques.

“We are very clear on our focus in this area,” Jones said.

In August 2016 the CalPERS investment committee adopted the fund’s sustainable investment strategic plan which among other things identified corporate board diversity and inclusion as a strategic initiative.

Over the past few years CalPERS has engaged 733 companies on the lack of diversity on its boards and since 2017, 53 per cent of those companies have added a diverse director to their boards.

Sustainability in a time of crisis featured Claudia Kruse, managing director global responsible investment and governance at APG, the EUR 538 billion European pension fund, and Nigel Topping, who was appointed by the UK Government as the High Level Climate Action Champion for the United Nations talks. The series also featured Masja Zandbergen who is head of sustainability integration at Robeco, and Fiona Reynolds chief executive of the Principles of Responsible Investment.

Flaws laid bare

The three important long-term trends that need to be addressed within the context of sustainability and the crisis are climate change, loss of biodiversity and inequality, Zandbergen said.

“This crisis has very well laid bare the flaws in our current economic system. In the future we need to prioritise fixing these issues, building more inclusive and more green economies and this will lead to good economic outcomes. But that requires a vision and leadership. Consumers, companies, investors and governments need to adapt,” she said.

Zandbergen said the finance industry needed to be focused on building new models that are not only about maximising monetary profits but also transition theory, and the value of ecological and social capital.

She said purveyors of finance need to make sure students get education that is broader than only the neoclassical financial theories.

She added that truly integrating sustainability in all asset management embedded in a thorough research process which requires a longer-term view than “just outsourcing ESG opinion to a data provider.”

White is responsible for the content across all Conexus Financial’s institutional media and events. In addition to being the editor of top1000funds.com, she is responsible for directing the bi-annual Fiduciary Investors Symposium.
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