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Pittsburgh pension fund drafts ESG policy as part of divestment drive

US city is working with NYC and C40 on pensions sustainability push

The public pension fund of Pittsburgh is finalising a far reaching ESG policy, slated for approval by its board next month. 

Initially, the $600m (€507m) fund had focused on developing a divestment strategy after being formally requested by Pittsburgh Mayor Bill Peduto in 2019 to sell off their holdings in fossil fuel firms, firearm and ammunition companies, and for-profit prisons.

But, according to Pittsburgh sustainability head Grant Ervin, fund administrators are looking beyond the project’s initial scope to develop policies on wider sustainability and governance considerations.

“Initially, we were just asking for divestment, but have realised that a more comprehensive approach was needed to align our portfolio with some of the work we are doing around social equity and inclusion, and the SDGS, which we have formally adopted. We feel it’s important to invest in companies which share common values with the citizens of Pittsburgh,” he told RI. 

“We’re also looking into how we could put our capital to work in our own backyard by investing locally in housing developments or clean energy for example. This is challenging for a smaller pension fund, but we are looking into whether the risk exposure can be managed.”

Ervin said that, according to a recent stocktake, the fund’s current holdings in sectors set for exclusion are not significant. 

Pittsburgh is being supported by the City of New York, green cities network C40 and US-based responsible investing body Heartland Capital Strategies. Representatives from the three bodies recently briefed city pension officials on the different tools, approaches and language used to craft an effective policy statement. The pension fund is also being advised by investment consultant Marquette Associates.

The sustainability push at the Pittsburgh pension trust is part of a city-wide action plan to combat climate change, which includes generating 100% renewable energy for municipal operations, halving water use and carbon emissions, and a zero waste initiative.

However, there has been some public opposition to the plans. Last year, the Pittsburgh Post-Gazette, the region’s largest paper, came out publicly in favour of engagement with the excluded sectors rather than divestment.