Born in Sacramento

The ‘Green Wave’ of clean environmental investing began here

As state treasurer, Phil Angelides rode the crest of the “green wave,” investing $400 billion in environmental advancements.

As state treasurer, Phil Angelides rode the crest of the “green wave,” investing $400 billion in environmental advancements.

Phil Angelides was the California state treasurer from 1999 to 2007 and the 2006 Democratic nominee for California governor

From the peaks of Yosemite to the coast of Big Sur, from the ancient Big Trees to the shores of Lake Tahoe, California is unrivaled in its natural beauty. Californians and visitors from around the world understand the wisdom of protecting these undeniable environmental gems.

But it was my responsibilities as California’s treasurer that led me to launch the “Green Wave” environmental-investment initiative. This first-in-the-nation effort put the weight of California’s public-pension funds—with $400 billion in assets—behind investments in environmental technology and the fight against global warming, with the goal of boosting our nation’s energy independence, creating jobs, and bolstering the funds’ financial returns.

The decision to invest with “green” objectives was about more than meeting our environmental and energy goals. It was about creating an economy of sustainable strength for generations to come.

As the son and grandson of immigrants, I was raised to see money as a powerful instrument that can and should be put to good use to create more opportunities for future generations. My father taught me that there was no purpose in accumulating money for its own sake; he said wealth was an opportunity to be used wisely.

This powerful idea, that “wealth … is not mere material for vainglory but an opportunity for achievement,” articulated by Pericles in his timeless funeral oration and passed down through generations of my Greek ancestors, shaped my tenure as California’s treasurer. I looked for ways to deploy the public dollars entrusted to me in ways that earned solid returns—my primary responsibility—but also in ways that could shape the contours of our economy for the betterment of our families and communities. In my first term as treasurer, I launched the Smart Investments and Double Bottom Line initiatives, which directed state-pension and investment dollars to promote smart-growth and sustainable-development practices and to create jobs, housing and opportunities in inner cities—places historically overlooked by financial institutions.

These investments have yielded strong returns. For example, CalPERS has earned annual returns of 20 percent over the last five years on its urban real-estate ventures.

In my second term as treasurer, I solicited the advice of innovative business leaders on how to build an economy of sustainability and broad opportunity for the 21st century. One of these leaders was the visionary venture capitalist John Doerr, who helped launch Internet giants Google and Amazon, among others. When I asked John which sectors represented the best opportunities to provide good jobs and sustainable economic growth for our state, he didn’t miss a beat.

Years before “green tech” was a buzz word and long before most business people were considering the threat of climate change, John told me that spurring the development of clean environmental technology was the smartest endeavor our state could undertake. A confluence of global trends, he said—the urbanization of developing countries and the accompanying need for clean water and clean energy; the impending threat of global warming and the carbon-emission caps likely to follow; the growing public consciousness about environmental responsibility, particularly among young people—would create a rapidly growing demand for public-policy and market solutions to our environmental challenges. California, home to Silicon Valley, some of the nation’s best scientists, engineers and research institutions, as well as a skilled workforce, was well-poised to seize the opportunities presented by these trends.

Over the next year, I continued meeting with the nation’s leading business and environmental leaders to develop an environmental investment-action plan. In November 2003, I joined United Nations Secretary General Kofi Annan, former Vice President Al Gore and investors from around the world representing over $1 trillion in assets at the United Nations for the first Institutional Investor Summit on Climate Risk.

There, in the midst of an unprecedented gathering of global capital, two things became clear: First, as Doerr predicted, the time was ripe for investor action. And second, investor action around environmental responsibility climate change wasn’t an option: It was the only option. The correlation between sound environmental practices and the corporate bottom line was becoming apparent. In a world of increasing environmental concern and regulation, companies could choose the path of denial, liability and risk, or adopt environmental practices that would allow them to thrive.

Launched in 2004 as an outgrowth of these efforts, the Green Wave outlined a comprehensive environmental-investment strategy. Under the plan, CalSTRS committed to invest nearly $1.5 billion in renewable energy and cutting-edge environmental technologies, to use their shareholder clout to push companies to address the financial risks posed by environmental liabilities and to join the fight against global warming, and to reduce energy consumption by their massive real estate holdings.

When CalPERS and CalSTRS acted, the business world took notice. Some of the nation’s largest companies already have launched serious efforts to “green” their business practices in response to public and shareholder pressure. With increasing activism by investors, more companies will no doubt jump on board the “Green Wave.”

Tackling climate change and energy independence is not at odds with the financial goals our public pension funds seek to meet. Those entrusted with protecting the financial security of our pensioners must take the long view, considering the environmental impact of each public dollar invested and advancing solutions that respond to our abiding environmental challenges.