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Engagements in action

CalSTRS invests a multi-billion dollar fund in a unique and complex social-economic milieu and recognizes we can neither operate nor invest in a vacuum. As a significant investor with a long-term investment horizon, engagement is a critical tool used by the CalSTRS Sustainable Investment and Stewardship Strategies team to influence changes in public policies and corporate practices that support long-term value creation.

We engage, through meetings, letters, shareholder proposals, investor coalitions and proxy voting, to influence companies to adopt best practices in managing environmental, social and governance issues to create sustainable businesses. We also engage policymakers to codify strong governance practices that improve the financial market landscape for long-term investors and their beneficiaries. Our history of engagement activities has resulted in better relationships and outcomes across global industries.

CalSTRS engagements for the second quarter, 2022

Our current and ongoing engagements to influence changes in public policies and corporate practices that support long-term value creation.

Engagement spotlight

2022 proxy season: A record number of shareholder proposals and CalSTRS’ escalated voting tactics 

The majority of U.S. corporations hold annual meetings from April through June to elect board members and make other key decisions, a time of year known as proxy season. CalSTRS casts our votes—also called proxy votes—at these meetings every year. Proxy voting represents one of our best tools to shape company behavior to drive long-term value creation. For this reason, we treat our votes with the same care as any other asset in the fund. Every year, we vote on nearly 100,000 items at more than 9,000 companies around the world.

This year, there were a record number of shareholder proposals (proposals introduced by investors rather than the company) on proxy voting ballots. As a significant global investor, we applied a consistent and thoughtful approach to voting on 1,033 shareholder proposals this year. Nearly 100 CalSTRS-supported shareholder proposals received more than 50% shareholder support, including successful proposals requesting companies align corporate activities with the goals of the Paris Agreement on climate change, enhance transparency and disclosures on racial equity, and strengthen governance practices. Majority support of these proposals indicates a growing understanding by shareholders that these issues are important when making investment decisions. They also send strong messages to companies about investor expectations. For the 2022 proxy season, we voted in favor of shareholder proposals that made measurable gains toward companies, including in the energy sector, achieving their net zero goals, such as setting appropriate science-driven targets to reduce emissions.

We expect corporations to appropriately manage climate change risks by publishing a report aligned with the internationally recognized Task Force on Climate-Related Financial Disclosures and disclosing, at a minimum, direct emissions (Scope 1) and indirect emissions (Scope 2). Additionally, this year we cast more votes against directors of companies acting too slowly on climate change and diversity.


CalSTRS voted against nearly 400 directors at companies that had not disclosed fundamental greenhouse gas emissions data and against more than 4,000 directors at companies with boards comprised of less than 30% women.


These voting tactics reflect an escalation in the engagement process. When progress is too slow, we will leverage all tools available to bring about change.

    Stewardship priorities update

    Net zero transition 

    Southern Company issues Just Transition Report

    Southern Company, a CalSTRS-led Climate Action 100+ utility company and the second largest utility provider in the United States, released its first Just Transition Report. “Just transition” refers to securing the rights and livelihoods of workers as the economy makes fundamental shifts toward decarbonization. Southern Company’s report outlines a set of just transition principles that foster strong governance, effective stakeholder engagement and transparent communication by the company. The report also outlines support for employees whose jobs are affected by its decarbonization efforts.

    During past engagements, Climate Action 100+ investors, including CalSTRS, have prioritized the need for companies to incorporate just transition and equity issues into long-term climate strategies. Southern Company is an industry leader with practices that can influence other energy companies.

    Climate Action 100+ benchmark shows improvement toward net zero goals

    In March 2022, Climate Action 100+, the world’s largest investor-engagement initiative on climate change, released the second round of its Net Zero Company Benchmark assessments. The benchmark primarily illustrates how companies are responding to CalSTRS’ and other investors’ requests to transition to net zero-emissions business models.

    According to the data, 69% of focus companies have committed to achieve net zero emissions on some level by 2050 or sooner, and nearly 90% publicly report detailed emissions disclosures. As lead investor in Climate Action 100+, we use the information from the benchmark to develop engagement strategies and assess the alignment of company decarbonization plans with the goals of the Paris Agreement.

    An advisory panel that includes the Transition Pathway Initiative, Carbon Tracker Initiative, InfluenceMap, and 2° Investing Initiative developed the Climate Action 100+ Net Zero Company Benchmark in 2020. The group works with companies to gather information on the benchmarks’ 10 disclosure indicators and releases the data to the public. The indicators assess how companies are transitioning to low-carbon business models and outlines the governance processes being put into place to help ensure companies’ climate goals are achieved.

    This fall, Climate Action 100+ will release updated benchmark scores to show how companies have improved since the beginning of 2022. The 166 companies on the initiative’s focus list account for about 80% of the world’s corporate industrial greenhouse gas emissions.

    Corporate and market accountability 

    Securities and Exchange Commission takes action on climate; CalSTRS pushes for robust corporate disclosures

    In March 2022, the Securities and Exchange Commission took a major step toward requiring companies to report climate-related disclosures. The agency announced draft rules intended to help investors understand climate-related risks at public companies. CalSTRS committed to a net zero investment portfolio by 2050 or sooner and frequently communicated verbally and in writing with the SEC in pursuit of such rulemaking. These disclosures are crucial for investors like us to measure companies’ progress toward a net zero world.

    We are supportive of the proposed rules and responded to the SEC’s request for feedback. We also asked the SEC to consider further enhancements to the proposed rules: Include Scope 3 (value chain) emissions disclosure requirements, require attestation of greenhouse gas emissions, and use the International Sustainability Standards Board’s Climate Standard as the basis for its rulemaking.

    Responsible firearms 

    CalSTRS’ engagement strategy supports a crackdown on ghost guns

    CalSTRS’ effort to encourage federal policymakers to change regulation on ghost guns is paying off. In April 2022, the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) issued a new rule requiring serial numbers on ghost guns. Last year, our stewardship team developed a strategy to reduce the violence associated with ghost guns, which included submitting a letter in support of a proposed ghost gun regulation.

    When the regulation takes effect on August 24, 2022, the parts used to make ghost guns must be registered and sold by a federally licensed firearms dealer, which will include filing paperwork and requiring the purchaser to complete a background check.

    Since 2016, ghost guns have become a growing problem in law enforcement investigations because they lack a serial number, making it extremely difficult to trace ownership when recovered at a crime scene. By 2021, more than 20,000 ghost guns were recovered from crime scenes across the country, according to ATF reports.

    In addition to writing a letter of support of the new ATF regulation, CalSTRS staff engaged with the credit card industry to establish best practices that would help prevent the sale of ghost guns in states where they are illegal. Credit card companies say they are aware of the new regulations and will work with retailers to ensure firearms transactions comply with the new federal regulation.