Oregon’s State Treasurer Tobias Read today convenes US institutional investors to discuss how best to manage ESG risks and opportunities, particularly those associated with climate change — joining a growing list of US treasurers to take the lead on sustainable investing.
The sustainable investing summit takes place as the Pacific Northwest state’s forests are ravaged by wildfires, amid high temperatures and low rainfall.
RI spoke to Treasurer Read, the Democrat politician elected in 2016 and who is responsible for assets in the region of $103bn – ahead of the event in Portland. He told RI that localised environment disasters like the fires bring climate change “from the abstract to the immediate” and make the ESG argument easier.
He said the high-level event is also an opportunity for Oregon to outline its expectations around ESG to asset managers, represented at the event by the likes of State Street Global Advisors, BlackRock and Goldman Sachs. “We have these conversations internally with them [asset managers],” he said, “so we don’t mind publicly saying that these are things we talk about, ask about, and care about”.
Gina McCarthy, the former administrator at the US Environment Protection Administration Agency and John Streur, CEO at US SRI firm Calvert Research Management will also deliver keynote speeches at the event.
Oregon’s funds, which are managed by the Oregon Investment Council (OIC), include the $73bn Oregon Public Employees Retirement Fund (OPERF), one of the largest public pension pots in the US.
The consideration of ESG risks and opportunities when making investment decisions _ is _ a fiduciary duty, Read told RI. “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”, he said.
He also spoke of his ambition to integrate ESG across the Treasury’s investment processes and “selection sequences”.
Read acknowledged, however, that the State’s work around ESG is still in its “early days”. But, he added, the recent appointment of Oregon’s first ever ESG dedicated professional will be key to it realising its ambitions.
Anna Totdahl was appointed ESG Investment Officer in June following approval from the State’s legislature in 2017 to create the role. She joined from US financial group Prudential Financial.
A big part of Totdahl’s role, which sits at the “centre” of the Treasury’s risk and research team, will be to find the best providers of ESG tools and data to help develop Oregon’s own sustainable investing approach.Oregon’s assets are currently managed through a mix of external and in-house management, though the proportion managed internally is growing, according to Read.
The State’s Treasury is also in the process of selecting a proxy advisor for its funds, following a request for proposals earlier in the year. Its current contract with Glass Lewis expires in 2018.
Read also told RI that Oregon, a founding member of Sustainable Accounting Standards Board (SASB) Institutional Advisory Group, favours engagement over divestment, which he sees as forfeiting your influence on companies.
Oregon is a member of the Climate Action 100+, the engagement focused initiative of 256 institutional investors representing $28trn in assets seeking to bring about change at the worst greenhouse gas emitting listed-companies.
He also spoke of the “informal collaboration” with other US treasurers around ESG but didn’t want to name them – though Read suggested that based on their “public position” it would be easy to guess.
Several US treasurers at the state and city level have made big strides around ESG in the last couple of years.
Last month the Office of the Illinois State Treasurer, Michael Frerichs, who oversees assets of $30bn, became a signatory to the Principles for Responsible Investment (PRI). It followed the approval of the Illinois State Treasury’s Sustainability Investment Policy Statement in April 2018.
In July, RI interviewed Rhode Island State Treasurer, Seth Magaziner, a former equities analyst at Boston-based SRI firm Trillium Asset Management, about how the State’s $8.3bn pension fund was ramping up its ESG efforts.
Chicago’s City Treasurer, Kurt Summers revealed to RI in June that it was to become the first US city to integrate ESG issues into the management of all its $8bn (€6.8bn) treasury assets. Summers added that the city’s pension funds, with assets of $25bn, may also follow suit.
Both New York State Comptroller, Thomas DiNapoli and New York City Comptroller, Scott Stringer, are currently exploring how to decarbonise the portfolios they oversee.
Stringer announced early this year that New York’s five public pension funds, running assets of $189bn, would divest holdings in fossil fuels and is currently seeking advice from the market on how to do it.
Taking a less radical stance, DiNapoli’s office announced this year the creation of a decarbonisation advisory panel for the $209bn fund.