CalPERS Reports 71% Loss on $468 Million Clean Energy Investment, Critics Cite ESG Focus

Sacramento, California – The California Public Employees' Retirement System (CalPERS) has reportedly incurred a substantial 71% loss on a $468 million investment in a Clean Energy & Technology private equity fund, according to recent reports. The investment, originally committed in 2007, has seen its value plummet to approximately $138 million by March 31, 2025, sparking criticism about the prioritization of progressive policies over financial returns for retirees.CThe California Public Employees' Retirement System initially invested $468,423,814 into the Clean Energy & Technology Fund (CETF). Despite the significant loss of over $330 million, private equity firms managing the fund collected at least $22 million in fees and costs. Public finance experts have cautioned against private equity for pension funds, citing high fees, elevated risk, and lack of transparency.CalPERS has acknowledged the poor performance of this specific investment, attributing the issues to the fund's former management. A CalPERS spokesperson stated, "The CalPERS Clean Energy & Technology Fund dates back to 2007, before the pension fund’s board and staff worked together to tightly focus our private equity strategy." The pension system also defended its overall performance, citing an 11.6% return for the 2024-25 fiscal year and asserting that private equity has been its best-performing asset class over the past two decades.Critics, including public finance expert Marc Joffe, have highlighted the "combined dangers of private equity and ESG investment," suggesting that the opaque choice appeared to be driven by "green credentials" rather than optimal returns. Joffe argued that CalPERS would have been better served by a diverse portfolio of publicly-traded equities. The fund, managed by Capital Dynamics, reportedly focused heavily on U.S. solar projects, with some drawing parallels to high-profile failures in the sector during that era.Further transparency concerns have arisen as CalPERS has declined public records requests for more detailed information on the clean energy fund's specific investments. The pension fund cited a state law that exempts many records for alternative investments, such as private equity, from public disclosure requirements. This lack of transparency has fueled concerns among watchdogs and stakeholders about how public money is being managed.With CalPERS' pension benefits reportedly only 79% funded, leaving an estimated $180 billion shortfall, the losses from such investments ultimately impact California taxpayers, who serve as the backstop for underfunded state pensions. The incident underscores ongoing debates about the role of environmental, social, and governance (ESG) factors in public pension fund investment strategies.