Rendering of MainPlace, a project of CalPERS and Hines.

The nation’s largest public pension fund is greening its entire $25 billion real estate portfolio.

“We believe this green building space will ultimately create jobs and redefine existing jobs within the construction industry,” said Laurie Weir, real estate portfolio manager for California Public Employees' Retirement System (CalPERS), in a presentation at the building conference PCBC this summer.

With assets of $239 billion, CalPERS wields enormous investment clout. CalPERS, which provides retirement, health and related financial benefits to 1.5 million public employees, retirees and their families, launched its “Green Wave” initiative three years ago with the goal of trimming energy use by 20 percent over a five-year period across its real estate portfolio. The plan is on track, Weir says, with partners reporting 6.9 percent in energy savings in the first year and 10.8 percent in the second.

“Our developers and investment advisers have figured out this is not just an environmental issue anymore; this is an economic issue,” says Weir, who notes the real estate funds and developers with whom CalPERS partners are required to produce returns in the range of 17-20 percent.

In 2006, CalPERS partnered with London-based Hines, one of the world’s largest commercial office building developers, on its only exclusively green real estate investment fund. “They don’t even look at a building unless they know that they’re going to get at least LEED Silver certification,” says Weir, referring to the U.S. Green Building Council’s Leadership in Energy and Environmental Design rating system.

The Hines CalPERS Green Development Fund has about $277 million in equity capital and is now working on about $1.1 billion in projects, according to Weir.

Other green activities undertaken by CalPERS' development partners include: green leases, water conservation efforts, waste stream audits, solar panel installation and recycling of demolition and construction waste.