BOSTON (Reuters) – An upcoming United Nations climate summit will give world leaders a chance to push for standardized measures of areas like corporate carbon emissions, the head of the largest U.S. pension fund said on Monday.
Marcie Frost, chief executive of the California Public Employees’ Retirement System, said she is optimistic leaders at the event known as “COP26” will take an important step in slowing global warming by helping investors decide which companies to buy or sell.
“When institutional funds like Calpers are making allocation decisions on this data, we believe that will be a bit of an inflection point,” said Frost, speaking in an interview at the Reuters Impact conference.
With $469 billion under management as of June 30 Calpers has been influential in driving the adoption of standards to measure corporations’ so-called ESG impact on environmental, social and governance topics.
Currently investors are faced with a wide variety of ESG ratings systems from private companies to measure areas ranging from their greenhouse gas reduction targets to the diversity of their workforces. Corporations have space to offer statements that sound ambitious but don’t stand up to scrutiny, Frost said.
In some instances, “You ask three probing questions and it all rather dissolves,” she said.
Frost said it could still be a year or two before the U.S. Securities and Exchange Commission delivers official standards for how companies might report audited information.
Other helpful steps would be if governments removed fossil fuel subsidies and adopted carbon pricing systems, Frost said.
Some pension funds in other Democratic-led states have moved to divest from fossil fuels. Resisting such calls, Calpers instead has embraced a strategy of pressing for changes from within.
Frost noted Calpers’ role in the Climate Action 100+, an investor network created to pressure companies. It also backed the activist campaign that led to the election of new directors at ExxonMobil Corp this year.
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(Reporting by Ross Kerber in Boston, Editing by Nick Zieminski)