CalSTRS Votes Against Record Number of Boards in 2024

The California State Teachers’ Retirement System announced it voted against a record 2,258 boards of directors among its portfolio companies during the 2024 proxy season, mainly due to insufficient climate risk disclosure. The tally breaks the former high of 2,035 companies, set last year.

The fund has been busy this proxy season. Its votes came among more than 10,000 global company meetings in which CalSTRS voted on more than 100,000 ballot items on topics ranging from human capital management—such as workforce management and employee wellness—to board governance and climate-related risks.

According to the $341.4 billion pension giant, it expects all of its portfolio companies to help manage the risks and investment opportunities associated with climate change, as well as to publish a report on sustainability-related disclosures that follow the International Financial Reporting Standards. The standards have replaced the Task Force on Climate-Related Financial Disclosures as the monitor of companies’ progress on climate-related disclosures.

CalSTRS also wants the companies in which it invests to disclose their Scope 1 and Scope 2 greenhouse gas emissions. Scope 1 is the direct emissions a company makes, like smoke from its factories, and Scope 2 emissions are indirect, such as those stemming from the electricity a business uses. CalSTRS expects the biggest emitters among its portfolio companies to set targets to reduce GHG emissions.

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“We need consistent, accurate and comparable data from all companies in our portfolio to mitigate risk and accurately measure and reduce emissions,” said Aeisha Mastagni, a senior portfolio manager on CalSTRS’s sustainable investment and stewardship strategies unit, in a statement. “We will continue to use our voice alongside fellow institutional investors to hold companies accountable for climate-related disclosures.”

One encouraging development, according to the pension fund, was that there was “considerable improvement” in reporting of methane emissions by its portfolio companies, despite their inconsistent overall climate data disclosure. CalSTRS noted that methane is 80 times more potent than carbon dioxide, and CalSTRS is urging companies to join the United Nations-led Oil and Gas Methane Partnership 2.0 framework.

“Focusing on methane emissions is one of the most economically viable and immediate means to slow climate change,” stated the CalSTRS announcement, citing the International Energy Agency’s estimates that 30% of methane emissions from fossil fuel operations can be decreased at no net cost.

“Methane has a massive impact, and mitigation of methane is one of the more efficient ways to limit the impact of greenhouse gases worldwide,” said Mastagni.

CalSTRS credited engagements with its portfolio companies for convincing 10 of them to join the Oil and Gas Methane Partnership 2.0, including ExxonMobil, Chevron, Harbour Energy, OMV and Vital Energy. The fund also stated that several companies with which it has engaged have become members through mergers with companies that were already part of OGMP 2.0.

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Tags: California Teachers’ Retirement System, CalSTRS, Chevron, Climate Change, Climate Risk, Disclosure, ExxonMobil, GHG, Greenhouse Gas Emissions, Harbour Energy, Oil and Gas Methane Partnership 2.0, OMV, Proxy season, Scope 1, Scope 2, Sustainability, Task Force on Climate-Related Financial Disclosures (TCFD), TCFD, Vital Energy

Adding to its luxury investments this year, Abu Dhabi-based sovereign wealth fund ADQ has agreed to acquire an undisclosed minority stake in luxury auction house Sotheby’s in a deal worth $1 billion.

Under the terms of the agreement, ADQ will acquire newly issued shares of Sotheby’s with the aim of reducing the company’s leverage and backing its growth strategy. Billionaire investor Patrick Drahi, who acquired Sotheby’s in 2019, is also investing additional capital with ADQ and will remain the majority owner of Sotheby’s.

According to ADQ, the investment will support Sotheby’s growth agenda while accelerating its expansion into new markets. The institutional investor also indicated that the acquisition is part of its strategic plan to boost its arts and culture offerings domestically and to increase its presence in the Middle East.

“ADQ remains committed to exploring compelling investment opportunities that drive value for Abu Dhabi,” said ADQ Deputy Group CEO Hamad Al Hammadi in a statement. “Our investment underscores our firm belief in the enduring value of Sotheby’s brand, market leading platform and the ability of its management to execute on their growth agenda.”

The agreement, expected to close before the end of 2024, adds to ADQ’s luxury goods investments this year. In January, ADQ and Abu Dhabi-based conglomerate ADNEC Group signed agreements for the strategic acquisition of a 40.5% stake in Egypt-based Talaat Moustafa Group Holding’s hospitality arm, Icon Group, including a capital increase. That deal will result in ADQ owning a 49% stake in Icon Group, with ADNEC owning the remaining 51%. The transaction will also involve the acquisition of a stake in seven luxury hotels in Egypt, currently owned by the Egyptian government through Icon.

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