California Leading

From Silicon Valley to Hollywood via fast food and the counter-cultural movements of the Bay Area, California has long had an influence on global trends out of proportion to its geographic or demographic size. Lately, it is demonstrating this leadership in the area of socially responsible investment (SRI).

Its track record is already impressive. The two largest California state pension funds have been at the forefront of moves to improve corporate governance in the US, and were also among the first to announce that they would cease to invest in tobacco companies.

More recently, one of these funds, the California Public Employees Retirement system (CalPERS), revised its criteria for investment in emerging markets to include issues such as environmental protection, democracy, human rights, transparency and a free press. As a result of the change, it decided to divest from Indonesia, Thailand and Malaysia.

The state and its pension funds have also been looking at how they can invest more in so-called