CalSTRS reconfigures the managers of its SISS portfolio, focusing on private market investments
The California State Teachers' Retirement System (CalSTRS) has announced a strategic overhaul of its Sustainable Investment and Stewardship Strategies (SISS) portfolio, focusing exclusively on private markets. This shift aligns closely with CalSTRS' net zero ambition and its broader climate-focused investment goals [1].
Previously, the SISS portfolio encompassed public market investment managers. However, as of May 2025, SISS dedicates its assets to private market portfolios that pursue climate-related infrastructure and other solutions designed to address climate change mitigation and adaptation [1][2]. This strategic pivot enhances CalSTRS’ ability to deploy capital directly into projects and companies that contribute measurable environmental impact, thereby supporting the fund's net zero target and climate solutions mandate.
The exact asset allocation percentages within different private market segments, such as direct infrastructure, private equity in clean tech, or climate adaptation projects, are not detailed in the available sources. However, the emphasis is clearly on climate solutions investments rather than broader ESG or general sustainable investment mandates. This suggests a portfolio tilted towards investments expected to generate both financial returns and climate impact, consistent with CalSTRS' net zero ambition to reduce portfolio carbon intensity and drive decarbonization through capital deployment.
The change in direction for the SISS portfolio is part of CalSTRS' wider net zero ambition, aiming to reduce emissions from its investment portfolio by 50% by 2030. The SISS public equity portfolio was not transferred wholesale, with allocation decisions made prior to the transition to ensure complementarity with the CalSTRS Global Equity Portfolio.
The two largest SISS exposures as of mid-2025 are Nordea Global Stars (13.1%) and Starboard Value (12.7%). Interestingly, Generation and Schroders, which were the top two managers last year, accounting for over 42% of the SISS portfolio, are no longer listed in the current exposures [1].
The SISS Portfolio is now a private markets-focused, climate solutions-dedicated platform, strategically designed to advance CalSTRS' net zero commitments by targeting investments with explicit climate outcomes across infrastructure and related sectors [1]. In addition to this shift, CalSTRS is planning to expand investments in transition assets.
The board voted to approve the SISS portfolio change at the same meeting where the recommendation was made. The California State Teachers' Retirement System (CalSTRS) Sustainable Investment and Stewardship Strategies (SISS) portfolio is central to the $367.7bn pension fund's climate solutions investments. The changing asset manager exposure for SISS is due to the May 2025 recommendation to 'graduate' the SISS public holdings into the wider CalSTRS global equity portfolio.
[1] CalSTRS Press Release, "CalSTRS announces strategic shift in Sustainable Investment and Stewardship Strategies (SISS) portfolio," May 2025. [2] CalSTRS Board Meeting Agenda, "SISS Portfolio Change," May 2025.
- In alignment with CalSTRS' net zero ambition, the Sustainable Investment and Stewardship Strategies (SISS) portfolio is now exclusively focused on private markets, specifically climate-related infrastructure and other solutions for climate change mitigation and adaptation, indicating a significant shift towards technology and business investments aimed at counteracting climate change.
- As part of CalSTRS' wider net zero ambition, the SISS Portfolio has been restructured to prioritize climate solutions investments, primarily in private markets, which not only support the fund's financial goals but also aim to generate measurable environmental impact, thereby contributing to the reduction of portfolio carbon intensity and the drive towards decarbonization.
