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Corporate Engagements
CalPERS corporate engagement process has the overarching objective of improving alignment of interest between providers of capital and company management. It is CalPERS view that improved alignment of interest will enable the fund to fulfill its fiduciary duty to achieve sustainable risk adjusted returns. There are three main drivers in the corporate engagement program:
- Financial Performance – company engagement to address persistent, relative value destruction, through the Focus List Program;
- Values Related Risk – material environmental, social and governance factors, such as reputational risk , climate change, board diversity and key accountability measures such as majority voting;
- Compliance – in response to State or Federal legislation, such as Iran and Sudan Acts calling for divestment, which CalPERS mitigates as a risk via engagement.
CalPERS engagement activity is market wide, which can be considered as a strategy for improving the quality of beta in the portfolio. CalPERS also has company specific engagement, which can be viewed as a strategy for addressing alpha related risk. Compliance is a requirement and mitigates both financial and reputational risks for CalPERS.
January 21, 2011
Letter to Sodexo Regarding Business Unit's Disclosure (PDF, 94 KB)