CalPERS Investment Policy

5 Corporate Responsibility¹

Shareowners can be instrumental in encouraging responsible corporate citizenship. CalPERS believes that environmental, social, and corporate governance issues can affect the performance of investment portfolios (to varying degrees across companies, sectors, regions, and asset classes through time.) Therefore, CalPERS joined 19 other institutional investors from 12 countries to develop and become a signatory to The Principles for Responsible Investment (Appendix D).²

CalPERS expects companies whose equity securities are held in the Fund's portfolio to conduct themselves with propriety and with a view toward responsible corporate conduct. If any improper practices come into being, companies should move decisively to eliminate such practices and affect adequate controls to prevent recurrence. A level of performance above minimum adherence to the law is generally expected. To further these goals, in September 1999 the CalPERS Board adopted the Global Sullivan Principles of Corporate Social Responsibility.

CalPERS believes that boards that strive for active cooperation between corporations and stakeholders will be most likely to create wealth, employment and sustainable economies. With adequate, accurate and timely data disclosure of environmental, social, and governance practices, shareowners are able to more effectively make investment decisions by taking into account those practices of the companies in which the Fund invests. Therefore, CalPERS recommends that:

5.1 Human Rights Violations: Corporations adopt maximum progressive practices toward the elimination of human rights violations in all countries or environments in which the company operates. Adherence to a formal set of principles such as those exemplified in Appendix E, the Global Sullivan Principles, or the human rights and labor standards principles exemplified in Appendix F by the United Nations Global Compact³, is recommended.

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(Editor's Note: Footnote references & corresponding footnotes that are not relevant to this issue have been omitted.)

¹Page 15-16 (return to text)

² APPENDIX D: Principles for Responsible Investment - Launched in April 2006, The Principles for Responsible Investment (PRI) provides the framework for investors to give appropriate consideration to environment, social and corporate governance (ESG) issues. The PRI was an initiative of the UN Secretary-General and coordinated by UNEP Finance Initiative and the UN Global Compact. An international working group of 20 institutional investors was supported by a 70-person multi-stakeholder group of experts from the investment industry, intergovernmental and governmental organizations, civil society and academia. CalPERS is one of the original signatories. (return to text)

³ Appendix F: United Nations Global Contact cites ten princples, including: Human Rights - Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and Principle 2: make sure that they are not complicit in human rights abuses. p. 63 (return to text)