Key Takeaways
- • CalPERS has deployed $60 billion of its $100 billion climate investment commitment announced in 2023, with CIO Stephen Gilmore confirming the fund remains on track to meet deployment targets by decade's end.
- • The pension fund generated a 14.8% investment return in the past fiscal year, with private equity delivering notably strong performance at 24.1% net return, driven by a strategic shift toward venture growth and mid-market funds rather than traditional buyouts.
- • CalPERS has committed $5.8 billion to a customized public equity Climate Transition Index strategy and invested across multiple private market climate vehicles including TPG Rise Climate, Generation IM Sustainable Private Equity Fund II, B Capital Climate Fund I, and Copenhagen Infrastructure Partners V.
- • CEO Marcie Frost attributed strong performance to disciplined portfolio repositioning that emphasizes co-investments and growth-stage private markets, which she stated creates "higher returns" and drives "growth and job creation" domestically and globally.
- • The fund is pursuing a dual mandate: accelerating climate solutions deployment while simultaneously halving its portfolio carbon footprint by 2030, with 70% of companies engaged through Climate Action 100+ having set long-term emissions reduction targets.
Summary
CalPERS, the nation's largest public pension fund, is maintaining momentum on its ambitious $100 billion climate investment commitment, with $60 billion deployed to date according to CIO Stephen Gilmore, speaking at the fund's annual offsite meeting. The pledge, made in 2023, targets deployment of $100 billion in climate solutions investments while reducing the fund's carbon footprint by 50% by 2030. Gilmore's confirmation positions CalPERS on track to meet both objectives within the stated timeframe.
The fund's recent financial performance underscores the potential returns available in climate-focused strategies. For the past fiscal year, CalPERS reported a 14.8% investment return, with private equity holdings generating particularly robust returns of 24.1% net. This performance reflects a deliberate strategic pivot away from traditional large-cap buyout funds toward venture growth and mid-market investments, complemented by increased direct co-investments. CEO Marcie Frost characterized this shift as essential to capturing higher returns while simultaneously supporting economic development and job creation across California and beyond.
On the climate investment side, CalPERS has diversified its deployment across both public and private markets. The fund committed $5.8 billion to a customized public equity Climate Transition Index strategy. In private markets, climate capital has been allocated to vehicles spanning private equity, infrastructure, and sustainable credit, including commitments to TPG Rise Climate, Generation IM Sustainable Private Equity Fund II (A), B Capital Climate Fund I, West Street Climate Credit (Del) LP, Copenhagen Infrastructure Partners V USD Feeder SCSp, and Brookfield Global Transition Fund II-B. These investments position the fund to capture returns across the full spectrum of energy transition opportunities while meeting emissions reduction targets.
Frost also addressed governance tensions, pushing back against what she characterized as efforts to increase disclosure requirements for private market allocations, stating the fund must "push back against efforts to put politics over pensions" to protect long-term pension sustainability. Complementing the fund's active investment approach, engagement efforts through the Climate Action 100+ consortium have yielded tangible results: 70% of companies engaged by CalPERS through this mechanism have now established long-term emissions reduction targets, indicating meaningful progress in corporate climate accountability.
The fund's recent financial performance underscores the potential returns available in climate-focused strategies. For the past fiscal year, CalPERS reported a 14.8% investment return, with private equity holdings generating particularly robust returns of 24.1% net. This performance reflects a deliberate strategic pivot away from traditional large-cap buyout funds toward venture growth and mid-market investments, complemented by increased direct co-investments. CEO Marcie Frost characterized this shift as essential to capturing higher returns while simultaneously supporting economic development and job creation across California and beyond.
On the climate investment side, CalPERS has diversified its deployment across both public and private markets. The fund committed $5.8 billion to a customized public equity Climate Transition Index strategy. In private markets, climate capital has been allocated to vehicles spanning private equity, infrastructure, and sustainable credit, including commitments to TPG Rise Climate, Generation IM Sustainable Private Equity Fund II (A), B Capital Climate Fund I, West Street Climate Credit (Del) LP, Copenhagen Infrastructure Partners V USD Feeder SCSp, and Brookfield Global Transition Fund II-B. These investments position the fund to capture returns across the full spectrum of energy transition opportunities while meeting emissions reduction targets.
Frost also addressed governance tensions, pushing back against what she characterized as efforts to increase disclosure requirements for private market allocations, stating the fund must "push back against efforts to put politics over pensions" to protect long-term pension sustainability. Complementing the fund's active investment approach, engagement efforts through the Climate Action 100+ consortium have yielded tangible results: 70% of companies engaged by CalPERS through this mechanism have now established long-term emissions reduction targets, indicating meaningful progress in corporate climate accountability.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.