CalPERS, the largest public pension fund in the US, will more than double its climate-focused investments to $100 billion by 2030. The fund will also consider selling stocks in companies that do not have credible net zero plans or invest in the energy transition.

CalPERS believes that the transition to a lower-carbon economy presents a significant investment opportunity. The fund’s new climate investments will be spread across different asset classes and will focus on companies that mitigate emissions, make infrastructure more resilient to climate change, or help other companies transition away from fossil fuels.

Related Article: CalPERS Names Peter Cashion New Head of Sustainability Program

CalPERS is open to selling stocks in companies that are not taking climate action seriously. However, the fund has not yet developed specific criteria for divestment. Instead, CalPERS will perform a financial analysis to model the financial risk to investors should the company not decarbonize.

CalPERS’ move to double its climate investments and consider selling stocks in companies with poor net zero plans is a significant step forward for sustainable investing. It is a sign that institutional investors are increasingly taking climate change seriously and are willing to put their money behind it.

Original quotes:

• “We believe there’s a full opportunity set coming about from the transition to a lower-carbon economy.” – Peter Cashion, CalPERS head of sustainable investing
• “It’s a very inelegant solution.” – Cashion on divesting from fossil fuels
• “We believe that an underweight or some tactical change would be appropriate.” – Cashion on companies that lag on climate action