Explain in brief: Three forms of capital for long term value creation as held by CalPERS for making their investment decisions.

Anchored by CalPERS Investment Beliefs, CalPERS believes long-term value creation requires the effective management of three forms of capital described as follows: Financial Capital (Governance): Governance is the primary tool to align interests between CalPERS and the managers of their financial capital – including companies and external managers. Good governance enhances a company's long-term value and protects investor interests. Physical Capital (Environment): Encouraging external managers, portfolio companies, and policy makers to engage in responsible environmental practices is important to identifying opportunities and risk management. This means making wise use of scarce resources, considering impact, and addressing systemic risks, such as climate change. Human Capital (Social): The success and long-term value of the companies one invests in will be impacted by their management of human capital. This includes fair labour practices, responsible contracting, workplace and board diversity, and protecting the safety of employees directly and through the supply chain.