CalPERS mulls expansion of private credit exposure to energy transition

The California Public Employees’ Retirement System is considering increasing its allocation to private credit focused on energy-transition investments, arguing that the sector offers an under-appreciated opportunity for lenders, according to a report by Bloomberg.

CalPERS already has exposure to the strategy, including an $800m allocation to a climate-focused fund managed by Goldman Sachs Asset Management. The pension fund is now assessing additional commitments to similar strategies, according to Peter Cashion, who oversees its sustainable investment programme.

Cashion said specialised private credit for green and brownfield energy projects remains relatively scarce compared with strategies focused on asset-backed securities and conventional corporate lending. In some cases, CalPERS has been able to achieve returns more commonly associated with equity investments while taking debt-level risk, he said.

The pension fund manages around $640bn and has maintained its commitment to private credit despite concerns that artificial intelligence could disrupt software companies held by private lenders. CalPERS has set a target of allocating 8% of its portfolio to the asset class.

For energy-transition investments, Cashion said debt could become increasingly important as companies seek to move towards sustainable and profitable business models. While substantial equity capital has flowed into the sector in recent years, additional leverage could help businesses scale while improving returns on that equity.

Debt remains a relatively small component of energy-transition financing. Of the $41.3bn invested in the sector during the first half of 2026, only about $11bn came through debt financing, according to Net Zero Insights.

CalPERS is also targeting $100bn of investments in climate solutions by 2030, covering areas including emissions reduction, the shift away from fossil fuels and adaptation to climate change. The pension fund had invested around $60bn towards that objective as of last year.

Cashion said the target reflects CalPERS’ belief that the energy transition represents a long-term source of investment opportunities across multiple asset classes and strategies.