Why CalPERS’ portfolio chief is leaving to go green

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The time is right for the green-investing movement, says Russell Read.

That’s why Read, who oversees the $242-billion portfolio of California’s huge state pension fund, is leaving that high-profile job to start his own business devoted to environmental and clean-tech investing, he told me today.

His plans aren’t fully formed, Read said. He isn’t sure if he’ll try to manage his own investment fund or build a business in some other way. Whatever the model, he said, he wants to help bring together what he views as now ‘disconnected efforts’ worldwide to develop and implement the best green technologies.

‘I might have the ability to play a major role in something that I think is of absolute paramount importance,’ he said by phone from a conference in New Orleans.

Read, 44 and a father of three, joined the Sacramento-based California Public Employees’ Retirement System as chief investment officer just two years ago. His decision to leave surprised CalPERS. Read said he hadn’t planned to depart this soon, but that events in the mushrooming green-investing industry overtook his own timing. ‘I didn’t anticipate [its] rapid development,’ he said.

Yet Read, who has a PhD in economics from Stanford University and who earned $958,000 at CalPERS last year, knows plenty about green investing. He has long been a private investor in Maine timberland and is involved in a hardwood reforestation project there. He has a deep knowledge of natural-resources industries.

What’s more, he has won kudos for his efforts to push CalPERS’ traditional stock-and-bond portfolio more toward so-called alternative investments that might generate higher returns in the long run. If they indeed pay off, the ventures would be good for the fund’s beneficiaries and for California taxpayers.

Those alternative investments include a 10-year, $600-million commitment to private-equity funds that are focused on investing in companies developing new energy sources, anti-pollution devices, recycling technologies and other green efforts.

‘He knows who the players are’ in the green-investing world, says Michael Rosen, head of pension consulting firm Angeles Investment Advisors in Santa Monica.

Which will, of course, help Read in his new business venture, whatever shape it takes.

Posted April 23, 2008