Transcript How Do Public Funds Choose Between SRI Strategies

How Do Public Funds Choose
Between SRI Strategies
Presentation By:
Meredith Miller
Assistant Treasurer for Policy
Office of the Connecticut State Treasurer
Green Mountain SRI Summit
September 9, 2002
Choice of Venue

In the public sector, SRI strategies can be
pursued through- Office of Public Official or
Pension/ Cash Funds or both

Examples of Office Strategies are financial
literacy programs and Individual
Development Accounts- both require
mandatory financial education

An example of Pension Fund Strategy is filing
shareholder resolutions

An example of Pension Fund Strategy and
Office Strategy is a Linked Deposit Program
Factors Influencing Office Programs

The policy priority of Public Official

Available Funds
- CT uses agreement with Fleet Bank to
fund financial literacy and community
development programs

Ability to serve as Catalyst with No Funds
- CT Conference on Women and
Money-with State Street and the
YWCA
Factors Influencing Office Programs

Power of the Purse
- CT contract with vendors requiring
disclosure of responsible corporate
citizenship
- CT Community Reinvestment Program –
Quasi linked deposit program with
banks
- Emerging Domestic Equity Program –
Standards for investment managers to
give broker dealer business to CT based
minority and women owned firms
Factors Influencing
Pension / Cash Programs



Board Governance
-
Is the Public Official Sole Fiduciary or member of
a board?
-
What is the board composition and openness to
SRI?
Regulatory and Policy Guidelines
-
Legislative Mandates (e.g., tobacco,
reincorporating offshore, MacBride)
-
Policy Guidelines (e.g., fund proxy and investment
guidelines
Division of labor between those responsible
for investing the funds and those responsible
for corporate governance
Public Funds and
SRI Screening Strategy

Some funds have screened based on their
own initiatives including CALPERS for
emerging markets and New York State for
tobacco

More than single issue screening not
prevalent
Public Funds can use SRI screening for
several purposes


Data to evaluate potential impact on fund of
divestment of certain stock
Data as overlay for corporate governance targeting
Public Funds can invest some portion of
assets into SRI mutual funds and/or
relational investor funds
Factors Influencing Office Programs

Private equity strategy of investing
in state or in discrete markets

Loans for mortgages of public
employees

Affordable Housing
Public Funds and
Shareholder Advocacy

Corporate Accountability definition must
be expanded to include SRI principles

Public Funds need data to support the
economic rationale for activism in this area

Better education about European
requirements for SRI

Coalition Efforts
Public Funds and
Shareholder Advocacy


Issues for Connecticut Funds
-
Diversity / relocations and Diversity Board
Project
-
Global labor and human rights workplace
standards
-
Environmental Issues
-
Offshore reincorporating
SRI Funds need to join other corporate
governance groups
What does it take to have an
SRI Strategy?

A view that local and global activism can
be pursued and still be consistent with
fiduciary and prudence standards

Broadening of definition of corporate
responsibility to include accounting /
financial integrity issues along with
environment, diversity, labor rights, etc.
(Responsible business practices)
What does it take to have an
SRI Strategy?

Merrill Lynch Principles calls for
investment managers to review corporate
governance principles of companies they
review and report on

NYSE calls for means for shareholders to
meet with independent board members

SRI Funds should lead the pack in
disclosing proxy voting or advertising that
they do

SEC disclosure should be pursued for
human capital investments