SB 964: Public Employees’ Retirement Fund and Teachers’ Retirement Fund: investments: climate-related financial risk.

The California Constitution requires members of the retirement board of a public pension or retirement system to discharge their duties with respect to the system solely in the interest of, and for the exclusive purposes of providing benefits to, participants and their beneficiaries, minimizing employer contributions thereto, and defraying reasonable expenses of administering the system. Existing statutory law establishes various public employee retirement systems and provides for the administration of the State Teachers Retirement System by the Teachers Retirement Board and for the administration of the Public Employees Retirement System, among other public employee retirement systems, by the Board of Administration of the Public Employees Retirement System.

This bill would, until January 31, 2035, require climate-related financial risk, as defined, to be analyzed to the extent the boards identify the risk as a material risk to the Public Employees Retirement Fund or the Teachers Retirement Fund. The bill, by January 1, 2020, and every 3 years thereafter, would require each board to publicly report on the climate-related financial risk of its public market portfolio, including alignment of the Public Employees Retirement Fund and the Teachers Retirement Fund with a specified climate agreement and California climate policy goals and the exposure of the fund to long-term risks, as specified. The bill would provide that it does not require either board to take action unless the board determines in good faith that the action is consistent with its fiduciary responsibilities. The bill would make related legislative findings and declarations.