CalPERS bets on real estate and equities as climate solution assets hit $60bn
US pension giant CalPERS has reported significant progress towards its goal of committing $100bn to climate solutions by 2030, with investments in real estate and public equities driving portfolio growth to nearly $60bn by the end of the first half of 2025.
The fund said the increase reflected both investment appreciation and new commitments, marking a major milestone just two years after setting its 2030 target.
CalPERS reported an investment return of 11.6% for the fiscal year, fuelled by strong performance in equities and private markets. Although details of its latest climate commitments have not yet been disclosed, last year the fund shifted more than $5bn of its equity holdings into a Climate Transition Index, designed as an alternative to conventional market-cap weighted indices. As of June 2025, $38bn – equivalent to 18% of CalPERS’ total equity portfolio – was invested using a factor-weighted approach.
In September, the fund announced a series of real estate commitments, including $1bn with Brookfield Asset Management and a further $400m with BentallGreenOak, supporting office, industrial and residential developments in Asia.
Despite political headwinds – including US president Trump’s withdrawal from the Paris Agreement and his dismissal of climate change as a “con job” – the Sacramento-based pension fund, which manages $556.2bn in assets, remains steadfast in its approach.
“In just two years, CalPERS has seen significant growth in its Climate Action Plan, growth that is driven by the energy transition,” said CalPERS CEO Marcie Frost. “Climate is a key megatrend, and CalPERS is committed to leading the way and finding the best investments on behalf of our members.”
However, CalPERS has faced criticism from campaign group California Common Good over the inclusion of fossil fuel companies within its climate solutions portfolio. The group highlighted the presence of firms such as BP, ExxonMobil and Chevron in the fund’s holdings.
In response, CalPERS said it had redefined its climate investments to focus on green revenues and that the companies in question play a role in financing low-carbon initiatives.
However, Allie Lindstrom, senior strategist with the Sierra Club’s Sustainable Finance campaign, expressed concern about the continued inclusion of fossil fuel assets. “CalPERS’ climate action plan, which uses size as a signal of ambition and counts progress in billions, doesn’t demonstrate progress on the things that matter most: emissions avoided, communities served, and clean energy expanded. This isn’t a PR issue — it’s about how investment strategies need to shift in a changing economy. System-level risks require system-level solutions. For a fund of CalPERS’ size and influence, that means using its leverage to mitigate the systemic risks of climate change that threaten both the economy and its beneficiaries’ pensions. CalPERS should start by adopting climate solutions principles that set clear investment exclusions and clearly define the strategies needed for mitigation, adaptation, and transition.
The fund has appointed Mercer Investments LLC in 2023 and in 2024 to review and benchmark its net zero plan against key industry standards.
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