In a press release, CalSTRS’ said the board will support the bill if it will indemnify CalSTRS officials and managers for divestment decisions made while applying the system’s new geopolitical risk investment policy in the Sudan.
At their June 7 meeting, the board enhanced the Investment Policy by adding a stringent screen for 20 socio/geo-political risk factors for all investments held in the portfolio, according to the release. The policy outlines the following process for dealing with companies where those factors affect the value of the investment:
- Directly engaging with companies that violate these policies to seek a change in corporate behaviors,
- After all reasonable efforts have failed, CalSTRS will direct its managers to seek suitable alternative investment opportunities in the affected sectors consistent with CalSTRS fiduciary duties, and
- If a company remedies the policy violations, CalSTRS can reinvest in it.
CalSTRS announced a plan last week to shift $11 billion of investments into high-rises, industrial parks, fast-growing startup companies and other private equity investments (See CalSTRS Plans Shift to Alternative Investments ).