CalSTRS CIO: new derivatives needed to hedge ESG risks
Second-largest US pension fund has also reduced fixed income allocation to 12% as rates have fallen
More advanced derivatives are needed to hedge environmental, social and governance risks, so investors can move away from “binary” buy-or-sell choices, says the chief investment officer of the second-largest US pension fund, the California State Teachers’ Retirement System.
Christopher Ailman, CIO of CalSTRS, says the fund has struggled to find “good tools” to hedge ESG risks in its $263 billion portfolio.
“I have looked at specific ESG risks, where we had exposure to companies that made a
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