There’s a movement afoot at elite colleges on both coasts to divest university endowments from controversial companies, especially those in the fossil fuel industry.
Ethically responsible investing is nothing new, but one person’s ethical violation may be another’s lifeblood and so the waters are murky at best.
Still, even before the latest movement at progressive universities, some large pension funds had already started moving away from such hot button issues in their portfolios. The California Public Employees Retirement System (CalPERS), the nation’s largest pension fund with more than $240 billion in assets under management, famously divested from gunmakers Smith & Wesson Holding Corp and Sturm, Ruger & Co after the Sandy Hook massacre in Connecticut. Just last year the same fund pulled $4 billion out of hedge fund investments citing the expense and complexity of such financial vehicles.
The pension funds for New York City retirees (~$150 billion AUM) are dwarfed by CalPERS but the city Comptroller, Scott Stringer, is dealing with many of the same issues. “My job first and foremost is to be a fiduciary. So I look at these issues in terms of creating long term value to the 700,000 retirees I protect, managing this pension fund,” he says. “Our public pension fund is concerned about our investment in many of these companies because obviously we believe the future is in clean energy. We’re worried about coal... one it's killing people but also it could be a dying industry so we want to have discussion about this as well.”
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One of the ways Stringer is dealing with such issues is a program he calls “boardroom accountability.” He is working with the aforementioned CalPERS and other big pension funds to demand “the right to run directors at major companies.”
Given the size of their investments these funds and the people that run them want to ensure the companies aren’t overpaying CEOs, lacking diversity in the C-Suite, or ruining the environment.
And while Stringer and others are trying to be responsible when it comes to investing and divesting he’s careful to point out “we do have a fiduciary responsibility to grow our pension fund and the long term value of the fund, so not everything is dealt with through the lens of the pension fund... I’m a citywide elected official representing 8.4 million people and part of my job as comptroller, in addition to the pension fund is doing audits and investigations - thinking about the longterm future of the New York City economy.”
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