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CalPERS Direct could point the way to more climate-wise investments

A sign in front of California Public Employees' Retirement System building in Sacramento, California.
California Public Employees' Retirement System building in Sacramento, California. Photo: Max Whittaker/Getty Images

Last week, the California Public Employees' Retirement System (CalPERS) announced its plan to invest directly in private companies, which could enable its members to capitalize on the transition to a low-carbon economy and protect assets against climate risk.

Why it matters: Global investment in renewable energy, energy efficiency and low-carbon generation must average $2.3 trillion between now and 2040 in order to keep warming below 2 degrees Celsius — the target established in the Paris Agreement. Accordingly, investors need to find pathways to profitably scale-up spending to three times current levels.