Last month, the California Public Employees Retirement System (CalPERS) sent a letter to its California real estate and private equity managers asking that they take a number of steps to conserve water. I found CalPERS’ justification provocative in light of the current hue and cry about whether corporations may reflect the beliefs of their owners:
We are seeking conservation measures because it is the right thing to do for our State and because they reflect our Investment Beliefs (PDF) as an institution.
Investment Belief 4 states that “Long-term value creation requires effective management of three forms of capital: financial, physical and human.” As part of this belief, we seek to engage with investee companies and external managers on governance and sustainability issues, including “Environmental practices including but not limited to climate change and natural resource availability.”
No doubt about it, CalPERS believes that it has beliefs and that the corporations that it invests in should act in accordance with those beliefs. However, I’m sure that the 44 law professors who filed this amicus brief in Sebelius v. Hobby Lobby, Inc. would be absolutely apoplectic at the idea that a shareholder, such as CalPERS, would attempt to foist its beliefs on to corporations:
This Court should not take even a small step down this path. Rather than embracing a rule that shareholders claiming control of a corporation can impose their personal religious [environmental] beliefs on minority (or even majority) shareholders and employees, the Court should reject the values pass-through theory.
Why should the nature of the beliefs change the result?
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