CalPERS climate action fund draws protests from beneficiaries and environmental groups; staff defends classification of some oil-and-gas activities

Hundreds of public commenters, including retirees, union members and environmental groups, urged the CalPERS Board of Administration on March 17, 2025 to remove fossil-fuel companies from its Climate Action Fund and to increase transparency about what the fund counts as a “climate solution.” CalPERS staff defended the fund’s methodology, saying it uses an activity-based, conservative approach and third‑party data to classify investments.

Speakers representing organizations including California Common Good, Sierra Club California, Fossil Free California, SEIU affiliates and multiple retiree advocates told trustees the fund’s $100 billion climate commitment should not include shares or partial activities of major oil-and-gas companies. Alyssa Giacchino of the Energy Stakeholder Project raised concerns about offshore LNG projects and a planned $850 million commitment to Global Infrastructure Partners 5; she said proposed Rio Grande LNG expansion and other projects pose climate, legal and community risks.

Several speakers urged CalPERS to adopt clearer, science-based definitions for “climate solutions,” to exclude companies on lists such as the Carbon Underground 200, and to provide annual disclosure of methodology for all asset classes. Crystal Zermeno of California Common Good said the group’s analysis showed roughly 14% of CalPERS’ climate solutions accounting came from legacy energy companies and said the fund had not demonstrated how those holdings reduce portfolio risk or emissions.

Peter Cashin, Head of Sustainable Investments at CalPERS, told the board staff’s approach uses three categories—mitigation, adaptation and transition—and relies on multiple data providers; he said the fund’s 2024 “climate count” stood at about $50 billion, up from $47.3 billion in 2023. Cashin said CalPERS sometimes assigns partial credit to low-carbon or green activities on the balance sheet of higher‑emitting firms (for example, revenues from green hydrogen, sustainable aviation fuel or carbon capture) and that the practice is consistent with third‑party standards and external reviews, including Mercer’s November 2024 assessment. “A green asset on an oil producer's balance sheet is as green as if it was held by a stand‑alone entity,” he said.

Commenters disagreed. Jacob Evans of Sierra Club California said counting portions of holdings with climate impacts “doesn't create a tangible effect on the green economy,” and called for stronger, science‑based criteria and annual disclosure for all asset classes. Fossil Free California and allied groups delivered a petition and public rallies after the meeting demanding that companies such as major oil and gas producers be removed from the climate solutions portfolio immediately.

Staff said the fund also underweights fossil-fuel companies in climate-transition strategies if firms lack credible decarbonization plans, and noted the fund’s deployment in transition-focused indices. Trustees said they wanted more transparency and additional stakeholder engagement in the implementation of the Climate Action Plan. CalPERS did not change policy at the meeting; staff were asked to continue dialogue and respond to stakeholder records requests and follow-up questions about the climate solutions classification methodology.

What happens next: CalPERS staff will continue engagement with stakeholders and release methodology documentation as part of ongoing Climate Action Plan implementation. Protesters signaled they will maintain public pressure and pursue further disclosure requests and advocacy.