CalSTRS outlines private markets work plan to strengthen oversight, education and processes

At the Jan. 8 Investment Committee meeting, CalSTRS staff presented a private markets work plan aimed at improving oversight across the system's growing allocation to private assets. Staff said the work plan will run over the current and next fiscal year and focuses on four components: education, investment-based practices, roles and responsibilities, and processes.

Scott Chan introduced the item as informational and said staff seek feedback and guidance rather than board action. Kirsty Jenkins, director of Sustainable Investment and Stewardship Strategies, described the proposed approach: an education program for board and staff, a review of investment beliefs and related policies, clarification of roles among the board, consultants and staff, and streamlined processes for communication, due diligence and external stakeholder input.

Staff emphasized that private markets now represent a material share of the fund and that the work plan seeks a holistic lens that includes public markets where useful. "We want timely, holistic oversight of our private market assets," Jenkins said. The presentation noted that private markets currently make up a much larger portion of the portfolio than in earlier decades and cited the importance of aligning governance and information flows accordingly.

Board members asked about coordination with the SIS team and public affairs to avoid duplicative outreach; staff said the work is a joint effort led by private markets with close collaboration across investment, legal and communications teams. Directors also asked whether the work plan accounts for differences among private asset types. Staff replied the plan will address asset-class-specific governance while maintaining common program-level practices.

Public commenters on the item urged CalSTRS to include workforce management and labor protections in private-equity principles. Doug Warr, chair of the CFT Retirement Policy Committee (caller), told the committee limited partners have constrained voice after allocating to general partners and urged clear, enforceable principles for private equity that include workforce protections and the same ESG criteria applied in public equity. Don Stauffer (in person) asked that private debt funds be identified and governed consistently rather than categorized under public equities when appropriate.

Staff told the committee they will return with more detailed next steps and a timeline, including education sessions for board members and proposed policy reviews. The item was informational; no vote was requested.