|Posted:||May 20, 2021 05:46 PM|
|From:||Senator Katie J. Muth|
|To:||All Senate members|
|Subject:||Requiring Socially Responsible Investment Policies for our State Managed Public Funds|
|There is an increasing trend across states to place increased focus and importance on Environmental, Social, and Governance (“ESG”) factors in the management of public capital by assessing and prioritizing an investment’s potential risks on those three non-financial factors.
According to a May 2018 report on ESG by the Governmental Accountability Office (GAO), relatively few retirement plans in the U.S. incorporate ESG principles into their investment process, and the use of ESG investing is more common among pension funds in Canada and Europe. However, as stated by the National Association of State Retirement Administrators (NASRA), some large and prominent public pension funds in the U.S. incorporate ESG principles into their investment processes, such as screening for certain environmental, social, and corporate governance (ESG) criteria, and/ or stocks of certain companies in certain are among the nation's largest public pension funds, as well as Colorado Public Employees' Retirement Association (PERA), Connecticut State Treasurer, the District of Columbia Retirement Board, the Maine Public Employees' Retirement System (MainePERS), the Maryland State Pension and Retirement System, and the Oregon Investment Council.
This proposal will incorporate concepts contained in legislation passed in 2020 in Illinois and will stipulate that state managed public funds, including SERS and PSERS, shall include sustainability factors that will be considered by the Boards, within the bounds of financial and fiduciary prudence, in evaluating investment decisions. These factors consist of but are not limited to:
· Corporate governance and leadership factors
· Environmental factors
· Socio-economic factors
· Public Health factors
· Business model and innovation factors
Adopting clear, socially responsible investment policies will help trustees, government officials and investment managers make prudent and socially responsible decisions in furthering the interests of the state and its people while also achieving financial security for our retirees.
Please join me in cosponsoring this legislation designed to ensure sustainable, socially responsible investment strategies for our state public pension funds.