The California State Teachers’ Retirement System voted against a record 2,035 directors at global companies during the 2023 proxy season, primarily over failure to provide sufficient climate risk disclosure.
In an August 10 announcement, the $315 billion pension fund said that many companies continue to fall short of its expectations to report on Scope 1 and Scope 2 greenhouse gas (GHG) emissions, as well as issuing climate reports based on the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD).
“We voted against boards that didn’t meet the most basic disclosure expectations,” said CalSTRS Portfolio Manager Aesha Mastagni, in a press release. “We need to make informed decisions to manage our portfolio on behalf of California’s educators, but that job is made more difficult if companies aren’t fully measuring and tracking their emissions. Fortunately, we believe mandatory GHG emissions reporting is on the horizon.”
After extended engagement with the U.S. Securities and Exchange Commission (SEC), CalSTRS said it was “hopeful” the regulator would release a set of climate-disclosure rules before the end of 2023, which would help enhance the climate-related oversight of U.S. issuers.
The pension fund also praised the International Sustainability Standards Board’s (ISSB) first two sustainability-related disclosure standards, which are forecasted to come into effect in January 2024.
“The ISSB is expected to partner with the SEC and jurisdictions around the world to establish minimum climate-disclosure standards for companies, which will make it easier for investors to assess how a company’s climate-related risks and opportunities will impact their portfolio,” CalSTRS added.