CalPERS reviews proxy voting strategies and prepares for 2025 season challenges

The CalPERS Board Meeting on March 17, 2025, highlighted significant developments in the California Public Employees Retirement System's (CalPERS) proxy voting and engagement strategies, which are crucial for the financial security of California's public employees.

During the meeting, CalPERS officials provided an annual update on their proxy voting activities from 2024 and outlined expectations for the upcoming proxy season. Notably, CalPERS voted on over 10,000 meetings last year and engaged with nearly 450 companies, focusing on accountability in areas such as climate issues, executive compensation, and board diversity. This proactive engagement is part of CalPERS' commitment to ensuring that companies adhere to best practices in governance and sustainability.

A key takeaway from the meeting was the anticipated impact of recent changes by the Securities and Exchange Commission (SEC) on shareholder proposals. CalPERS expects to see a reduction in proposals related to environmental and social issues due to the SEC's new guidance, which may limit the ability of shareholders to bring forth certain resolutions. This shift could affect how CalPERS engages with companies on critical issues like climate change and diversity, equity, and inclusion (DEI).

CalPERS representatives emphasized their ongoing commitment to DEI initiatives, despite a broader industry trend of companies reassessing their commitments in this area. The board reiterated that they would continue to press companies on human capital management, governance, and climate issues, reflecting the organization's values and priorities.

In addition to proxy voting, the meeting also addressed CalPERS' liquidity management strategies. The investment treasury team presented their approach to ensuring that the fund can meet its obligations, including benefit payments, even in times of market volatility. The team highlighted improvements in liquidity management processes since the financial crisis, emphasizing a holistic approach that integrates various funding channels and risk assessments.

The discussions at the CalPERS board meeting underscore the organization's dedication to responsible investment practices and its role in advocating for corporate accountability. As CalPERS navigates the complexities of proxy voting and liquidity management, its actions will continue to have significant implications for the financial well-being of California's public employees and the broader community.