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California Pension Fund Starts $500 Million ‘Green’ Portfolio

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Nov. 10 (Bloomberg) -- California Public Employees Retirement System, the largest public pension in the U.S., plans to invest $500 million in companies working on curbing greenhouse-gas emissions and improving the environment.

The internally managed fund mimics HSBC Holdings Plc’s Global Climate Change Benchmark Index. Calpers said it will target companies with “a material portion” of sales from alternative-energy production and conservation; water, waste and pollution control; or finance activities such as carbon trading. The HSBC-based model includes 380 securities, Calpers said.

“This new index has kept pace with non-environmental investments in recent years, and has outperformed our external environmental managers who have focused solely on excluding polluting companies from their portfolios,” George Diehr, Calpers investment committee chairman, said in the statement.

The $221.5 billion pension fund, which earned 13.3 percent on its holdings in the past fiscal year, has placed $500 million since 2006 with external managers who won’t invest in “polluting companies,” Diehr said. The Sacramento-based plan also has poured $1.5 billion into private-equity firms that target companies working on environmental technologies.

To contact the reporter on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net.

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