Fiddich Review Centre
Alternative Investment

CalSTRS’ CIO Christopher Ailman fears ESG bans could hurt energy transition

CalSTRS has set a new goal to halve the greenhouse gas emission across its portfolio by 2030, but a strengthening political movement in the U.S. banning ESG considerations could impede the world’s transition away from fossil fuels as an energy source, said Christopher Ailman, CIO of the $311.7 billion California State Teachers’ Retirement System, West Sacramento.

“I’m not a political guy. I’m an investment guy,” Mr. Ailman said in response to a reporter’s question during a media briefing. “I hope and pray this will be a smooth transition,” referring to global climate transition efforts.

But the actions of some state pension plans banning ESG considerations — and some countries focusing back on fossil-fuel use this winter — will make the energy transition “a very difficult and lumpy transition,” Mr. Ailman said.

“I have grandchildren,” he said. “I am worried about their future.”

Climate change will be “huge in their lives for the next 50 years,” Mr. Ailman said.

In August, Texas Comptroller Glenn Hegar released a list of 10 financial companies, including BlackRock, he has determined “boycott energy companies” as part of the enforcement of a 2021 state law restricting the state’s pension funds and other state entities from investing in companies that divest from fossil fuels.

Also in August, the Florida State Board of Administration, Tallahassee, banned the $189.7 billion Florida Retirement System from including ESG considerations in its investment management decisions.

Investment professionals understand that the energy transition not only presents risks to their portfolios, but that there is a huge investment opportunity, said Kirsty Jenkinson, investment director of sustainable investment and stewardship strategies at CalSTRS. And she noted that despite the political actions, Texas is a big producer of the U.S. wind energy.

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