In May, the U.S. House of Representatives Financial Services Committee unanimously voted to advance congressional bill H.R.3357, the Enhancing Multi-Class Share Disclosures Act. The bill focuses on public companies that use multi-class share structures, where some investors’ shares have greater voting power than others, creating a misalignment between an investor’s economic interest in a company and their voting power. If passed, the Securities and Exchange Commission will create new rules requiring companies to clearly disclose information about their multi-class structure. This creates transparency around who controls decision-making at companies and how investors with outsized voting power may skew outcomes.

CalSTRS is an ardent supporter of one share, one vote structures, which ensure an investor’s voting power is directly proportional to their economic interest in the company. We have worked for many years to bring an end to multi-class share structures, including collaboration with the Council of Institutional Investors. In instances where multi-class shares exist, we advocate they have a reasonable sunset period. H.R. 3357 represents a positive step toward limiting the practice of multi-class shares, provides needed transparency and bolsters shareholder democracy.

Defending the watchdog that ensures high quality financial audits

In June, CalSTRS wrote a letter to the U.S. Senate Committee on Banking, Housing, and Urban Affairs about a proposal to eliminate the Public Company Accounting Oversight Board. The PCAOB is a nonprofit corporation that oversees the financial audits of U.S.-listed public companies to ensure high-quality and accurate audits. Investors rely on financial disclosures from companies when making investment decisions. It was created by the Sarbanes-Oxley Act, a 2002 federal law passed in response to several major accounting scandals, including Enron and WorldCom. Scandals like these hurt investors, employees and customers, while harming the integrity of financial markets by reducing public trust.

We are concerned eliminating the Public Company Accounting Oversight Board and moving its duties to the Security and Exchange Commission—which already has many responsibilities and limited resources—will lead to lower audit quality. Our letter focused on the need for the PCAOB to continue operating as an independent, nonprofit corporation that specializes in audit quality.

Around the same time CalSTRS sent its letter, the U.S. Senate Parliamentarian ruled combining the SEC and PCAOB cannot happen under the draft legislation it was introduced in, due to Senate rules. While this development seems to protect the PCAOB for now, CalSTRS will continue to monitor possible legislative attempts to weaken audit integrity.

Supporting the European Union’s methane regulation

On June 13, CalSTRS sent a comment letter to the European Commission supporting the European Union Methane Regulation. The regulation aims to standardize methane emission disclosures and establish maximum limits for methane intensity of imported natural gas. This would help promote improved methane emission reduction practices.

Methane’s warming potential is 80 times more potent than carbon dioxide, though it does not last as long in the atmosphere. Reducing methane emissions remains a priority for CalSTRS because most current methane emissions can be eliminated with existing technology and at little to no cost to companies. In our letter, we focused on how the regulation will help reduce investment risk, improve our ability to research investments and support long-term value creation. We continue to look for opportunities to work with companies and regulators on improving methane emissions practices.

Examining coal plant retirement delays amid surging energy demand

CalSTRS is engaging major U.S. electric utilities and regulators about the extended timeline for retiring coal-fired power plants because of unprecedented energy demand. Through discussions with industry leaders, including Duke Energy, CMS Energy, DTE Energy, Dominion Energy, Southern Company and Entergy, CalSTRS is gaining insights on how much energy demand has increased and the implications of delayed coal retirements on both the energy transition and investment portfolios. These conversations are happening as utilities struggle with balancing environmental commitments against the reality of soaring electricity demand driven largely by the rapid expansion of data centers and artificial intelligence infrastructure.

Utility executives say postponing coal plant retirements temporarily ensures grid reliability while they build cleaner alternatives. We have pressed these utilities on how they are addressing the concerns of employees, stakeholders and communities affected by the retirement delays to understand the implications for a just transition.

The energy shortage is being driven significantly by data center operators and hyperscale cloud providers. While they prefer clean energy, operators acknowledge the current limitations of renewable power in providing the consistent 24/7 electricity supply their operations require. These facilities need suitable land, adequate water for cooling, reliable power and robust network connectivity. Companies that supply the resources necessary to build new AI infrastructure, including graphics processing units, cement, steel, cable and air conditioning, say they are seeing significant increases in their orders. As these requirements become more difficult to secure together, utilities are extending the operational life of coal plants.

Engaging at the intersection of AI and human capital management

CalSTRS staff attended the Baird 2025 Global Consumer, Technology & Services Conference and met with 18 public companies in the retail, restaurant, financial and health care sectors. Our meetings focused on human capital management, artificial intelligence adoption and governance and the financial impact of tariffs and other policy shifts.

Investors need strong human capital disclosure to assess a company’s long-term workforce stability. Through engagement directly with C-suite executives, we advocated for transparency across four critical human capital metrics: employee demographics, turnover rates, diversity and inclusion indicators and workforce composition data. Given the accelerating pace of AI adoption across our portfolio, we have also prioritized understanding workforce transformation impacts within labor-intensive sectors.

Moving forward, we will leverage these relationships to drive continued improvement and expand our outreach to additional industries with significant workforce exposure. This sector-by-sector approach will allow us to benchmark responses among company peers, validate management representations, and influence workforce disclosures and positive outcomes.