Investing September 6, 2022

California Pension Fund Seeks to Halve Exposure to Carbon Emitters

CalSTRS will move 20% of its public equity portfolio to a passive, low-carbon strategy.

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The California State Teachers’ Retirement System plans to reduce its holdings by 50% in greenhouse-gas-emitting companies by 2030. This will involve ditching some heavy fossil fuel users.

The pension plan’s board intends to achieve a net-zero portfolio by 2050, if not sooner, and it moved this week to refine its strategy to do so. As part of that effort, CalSTRS will designate 20% of its public equity assets to track the MSCI ACWI Low Carbon Target Index.

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CalSTRS is aiming at public stocks to begin with because they have more environmental data available, CIO Chris Ailman explained in a news briefing. After that, the fund will tackle fixed income, and then move to private-market assets, which have the least amount of accessible information.

The focus in divesting will be on companies’ levels of carbon emissions, Ailman said. The question is “who’s burning” the fuel, he added. The bulk of the divestments will be utility, transportation, cement and agriculture businesses, not oil and gas producers. Ailman noted that, when they’re drilling and pumping, energy producers don’t emit as much carbon as these other companies, other than when flaring off natural gas.

The pension program’s net-zero action comes amid the state legislature’s passage of measures imposing new regulations on oil and gas, and requiring that California cease putting carbon dioxide into the atmosphere by 2045.

In an analysis of its portfolio in March, CalSTRS said its exposure to fossil fuel companies amounted to $4.1 billion, which is a little over 1% of its current $312 billion portfolio.

Asked about state governments in Texas, Florida and other Republican-led states that ban investment firms they think oppose fossil fuel companies, Ailman remarked that those actions were “disheartening.”

He said he tells his red-state counterparts that climate-minded investing is a long-term proposition intended to limit business risk from environmental calamity. Ailman said CalSTRS cares about companies beyond “91 days of earnings,” and is more concerned about “91 months and 91 years.”

Deals and People September 2, 2022

Retirement Industry People Moves

MetLife Investment Management to acquire Affirmative Investment Management; Commonwealth hires deputy general counsel and chief privacy officer; Millennium Trust names chief marketing officer; and more.

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MetLife Investment Management to Acquire Affirmative Investment Management

MetLife Investment Management, the institutional asset management business of MetLife Inc., has announced that it has entered into a definitive agreement to acquire Affirmative Investment Management.

AIM is a global environmental, social and corporate governance impact fixed-income investment manager. The firm has capabilities in impact investing, verification, reporting and engagement. As of June 30, its assets under management were $1.01 billion.

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The acquisition is subject to customary closing conditions, including regulatory approval. According to the firms, the acquisition seeks to advance MIM’s ESG investment and reporting capabilities as it aims to deliver client solutions and long-term risk-adjusted returns.

“MIM will maintain its fundamental investment processes, and AIM brings us additional capabilities to evaluate sustainability and risk considerations across our core competencies in public fixed income, private fixed income and real estate,” says Steven Goulart, president of MIM and executive vice president and CIO for MetLife.

Commonwealth Hires Deputy General Counsel and Chief Privacy Officer

Commonwealth Financial Network has announced that Michelle Kelley is joining the firm as senior vice president, deputy general counsel and chief privacy officer. In this newly created position, Kelley will lead Commonwealth’s legal department and provide counsel on cybersecurity and privacy laws, partnering closely with Commonwealth’s information security team.

Kelley joins Commonwealth from LPL Financial and brings regulatory counsel to support Commonwealth’s growing efforts on fee-based business. With the increasingly necessary focus on data security and cybersecurity, Kelley will enhance Commonwealth’s privacy and data security alongside the firm’s chief information security officer, Mukund Ravipaty. She will report to Peggy Ho, senior vice president, general counsel and chief risk officer.

Kelley will provide guiding counsel to the firm and executive management team on strategic initiatives and regulatory matters. She will oversee the team responsible for commercial agreements, customer complaints, litigation and arbitrations, regulatory enforcement matters and contracts and vendor agreements.

Kelley graduated from Colgate University. She received her law degree from Boston College Law School and began her career as an associate at Ropes & Gray LLP. For the past 16 years, she has held various roles at LPL Financial, most recently as senior vice president, government relations, chief privacy officer and associate general counsel.

Millennium Trust Names Chief Marketing Officer

Millennium Trust Company has announced that it has hired Michelle Spellerberg as chief marketing officer and a new member of the firm’s executive leadership team. Spellerberg joins after more than eight years with Alliant, a digital credit union, where she held the position of vice president and chief marketing officer.

This new hire comes on the heels of Millennium Trust’s acquisition of PayFlex, a provider of health savings accounts and other consumer-directed benefits solutions, from CVS. The deal, completed in June, positions Millennium Trust to provide a full array of financial wellness services for clients at every stage of life.

Triton Pacific Securities Expands RIA Focus

Triton Pacific Securities has recently expanded its registered investment adviser capital markets team, adding Katie Hubbard as senior vice president of RIA channel and Western capital markets. Hubbard brings over two decades of capital-raising experience to the firm in this newly created role.

Hubbard will be joining Andrew Hurvitz, vice president of Eastern markets, and Kevin Kennedy, associate vice president.

In Hubbard’s previous role as senior manager of wealth advisory at Empower, she managed 40 retirement and wealth advisers. Prior to Empower, Hubbard was the national sales manager and partner at a large national registered investment adviser.

Hubbard graduated from the University of Denver with a degree in real estate and construction management and earned a master’s degree in finance from the University of Colorado. Hubbard currently holds her Series 7, 63, 65, 24 and SIE FINRA licenses.

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