Human Capital
Have you ever wondered what CalPERS is referring to when we talk about the "S" (or "social") factor in environmental, social, and governance (ESG)? To us, the "S" means human capital. When we think of the managers overseeing our investments, the people who work for our portfolio companies and their suppliers, the customers who buy our portfolio companies' products, and the communities affected by our portfolio companies' operations, we see human capital as a clear driver of value.
Unfortunately, there are no standards for measuring and reporting on human capital topics, making it difficult for investors to truly understand related risks and opportunities. That’s why we're engaging with standard setters, regulators, and other investors to call for improved disclosures around human capital topics such as management policies, practices, and performance.
Universal reporting standards would allow us to better understand and assess how our portfolio companies and external managers are managing their talent and other key human capital drivers of business.
Proper management of human capital is vital to the success of companies we invest in. For example, we've had a Responsible Contractor Policy (PDF) in place for our Real Assets portfolio for many years.
While engaging our external investment managers and portfolio companies on various human capital topics and reporting, we seek to understand their strategies surrounding workforce, diversity, culture, and organizational decision-making.
Our Work
- Diversity and inclusion surveys of our external managers to identify key best practices and opportunities for engagement with current partners on practices and policies
- Research on human capital topics such as economic inequality, workforce transition, diversity and inclusion, and sexual harassment
- Confidential engagements with public and private companies on a variety of human capital issues identified as investment risks in our portfolio
Partnerships are critical to our human capital strategy as they allow us to share experiences, pool resources and scale influence. With these global partners, we have engaged and collaborated with companies to better understand human capital risks and opportunities.
| Partner | CalPERS' Role(s) |
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Human Capital Management Coalition Understanding and improving how human capital management contributes to the creation of long-term shareholder |
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Council of Institutional Investors Promoting governance policies that enhance long-term value for institutional asset owners and their beneficiaries |
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UN Principles Responsible Investment Networking to incorporate ESG issues into decision making and ownership practices |
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International Corporate Governance Network Promoting effective global standards of corporate governance and investor stewardship |
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IFRS Sustainability Alliance Combining the SASB Alliance and the <IR> Business Network, this is the global membership program for sustainability standards, integrated reporting and thinking |
Active Member |
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ILPA Engaging, empowering, and connecting limited partners to maximize their performance |
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CalPERS External Manager Diversity and Inclusion Survey
Annual surveys are designed to communicate to our external investment managers areas of importance to us, while helping our staff understand the diversity and inclusion status and practices of our external investment managers. The voluntary surveys request information on diversity of workforce and policies and practices related to workplace culture and compensation, recruitment and retention, and diversity and inclusion.
We conduct one of the most inclusive diversity and inclusion surveys in the asset management industry to date, covering topics including harassment policies, pay equity, disability, recruitment, portfolio level company board diversity, ownership, and workforce diversity.
The Statement of Investment Policy for Responsible Contractor Program (PDF) demonstrates our support and encouragement of fair wages and benefits for workers employed by qualifying contractors and subcontractors, subject to fiduciary principles concerning duties of loyalty and prudence, both of which further require competitive returns on our real estate and infrastructure investments.
Visit our Responsible Contractor Program page for more information on the program.