Across state and municipal pension plans, state treasurers and plan fiduciaries are seeking to learn more about impact/ESG investments. Similar to our recent blog noting the adoption of impact/ESG strategies in defined contribution/401(k) plans, these municipalities also look to introduce new or increase their existing impact/ESG allocations.
Oregon State Treasurer Tobias Read recently held a sustainable investing summit to brainstorm how to best manage the risks and opportunities around impact/ESG investing. Given Oregon’s record-high temperatures and the high number of wildfires throughout the state and West Coast in general1, there was a specific focus on investments related to climate change. Plan fiduciaries realize they are in a position to direct capital to financially-responsible investments, including ones that can help combat climate change.
Oregon Treasurer Tobias Read, courtesy of www.oregon.gov
The summit included stakeholders from the Oregon Investment Council (OIC) which manages the $73B Oregon Public Employees Retirement Fund (OPERF), as well as members from some of the largest asset management firms in the country. “We are not doing our jobs as fiduciaries if we are not aware of, monitoring, and trying to mitigate the risk that climate and other ESG factors represent”, Mr. Read said.2
In addition to hosting the Summit, Mr. Read also hired Oregon’s first dedicated ESG investment professional, Anna Totdahl. Ms. Totdahl will seek to integrate new data on the benefits of ESG investing into Oregon’s public investments.3
Oregon has company in its efforts to add or increase impact/ESG strategies. Connecticut State Treasurer Denise Nappier presented an articulate defense and endorsement of ESG investing programs earlier this year, former North Carolina Treasurer Janet Cowell has made ESG investing a priority for their pension fund, and Illinois State Treasurer Michael W. Frerichs stated that additional risk and value-added factors need to be integrated into their decision-making process that may have a material and relevant financial impact on the safety and performance of their investments. These include sustainable factors such as environmental, social capital, human capital, business model and innovation, and leadership and governance factors. We anticipate over the next few years, the number of state treasurers making impact/ESG investing a priority will rise dramatically.