CalSTRS Forms Climate Co-Investment Partnership With Carlyle Alpinvest

The California State Teachers’ Retirement System is partnering with Caryle Alpinvest to expand the $374.3 billion pension fund’s ability to access co-investment climate solution opportunities, Carlyle Alpinvest announced Tuesday.

“This partnership is designed to expand CalSTRS’ ability to invest alongside private equity managers in climate solution opportunities beyond CalSTRS’ direct investment program,” Carlyle Alpinvest stated.

Carlyle Alpinvest is a specialist subsidiary of the Carlyle Group. Alpinvest reports $97 billion of assets under management, the Carlyle Group manages $465 billion in total, including Alpinvest assets.

The partnership is being made with the CalSTRS sustainable investment and stewardship strategies team, which, alongside Carlyle Alpinvest, will invest in opportunities that support the California pension fund’s sustainable investment goals.

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“The initiative will seek to identify climate-related opportunities that demonstrate positive sustainability outcomes across a range of themes,” Carlyle Alpinvest stated. “The approach is rooted in a flexible, intent-based framework designed to reflect a wide spectrum of global opportunities.”

In August, the California teachers’ pension fund named Kirsty Jenkinson as senior director for private markets and sustainable investment and stewardship strategies. The pension fund’s SISS strategy allocates capital to investments that deliver financial performance while creating positive sustainability outcomes, according to CalSTRS’ website.

In July, CalSTRS positioned the SISS portfolio to solely focus on private climate solutions. The SISS portfolio was previously comprised of a $1.2 billion private strategy (33%), $1.1 billion in cash (32%), a $655 million allocation to active U.S. equity strategies (19%) and a $566 million active global equity strategy (16%). The two public equity portfolios were transitioned to the fund’s global equity portfolio, according to a CalSTRS investment committee report.

The SISS private portfolio invests in climate solutions across infrastructure (40% of the private portfolio), private equity (36%) and private credit (22%), while a 2% allocation to a scaling portfolio leverages “existing CalSTRS partnerships with other asset classes to advance the goals of the Collaborative Model and increase sustainability-focused co-investment and joint venture opportunities,” according to the investment committee’s June 30 report.

The SISS team also collaborates with all the fund’s asset-class teams to develop and implement net-zero strategies across the portfolio. CalSTRS pledged in 2021 to achieve net-zero greenhouse gas emissions in its investment portfolio by 2050, later adopting an interim goal of reducing portfolio emissions by 50% by 2030.

“We are excited to work with CalSTRS’ Sustainable Investment and Stewardship Strategies team to expand access to co-investment solutions with a focus on climate,” said Todd Ruggini, a partner in Carlyle Alpinvest and a managing director on its co-investment team. “This effort builds on our long-term relationship with CalSTRS as well as our experience sourcing, underwriting, and executing transactions that meet the evolving needs of large investors.”

CalSTRS allocated 15.16% of its $374.3 billion portfolio—$56.771 billion—to private equity, as of August 21.