Embed Size (px)
DESCRIPTION
Citation preview
Socially Responsible Investing Forum
Donald A. Kirshbaum
Connecticut Office of the TreasurerDenise L. Nappier, Treasurer
How Socially Responsible Investing has become Responsible Investing
March 30, 2007
OverviewHistory Issue AreasCoalitions Examples Where are we
now? Where are we going?
• Connecticut Retirement Plans and Trust Funds (CRPTF) - $24 billion
• State Treasurer Denise Nappier– principal fiduciary
• Re-entered shareholder activism in 1999
OverviewHistory Issue AreasCoalitions Examples Where are we
now? Where are we going?
OVERVIEW
– History– Issue Areas– Coalitions– Examples
•Climate Change•Transparency•Sudan
– Where are we now?– Where are we going?
HISTORY
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?
• Screening Out• Value Judgments• Faith Based
Investors• SRI Investors• Sustainability• Shareholder
Activism
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?
• Corporate Governance• Energy Enrollment• Finance• Health Care• Human Rights and Labor Standards• Militarism• Inclusiveness
ICCR ISSUES: 2006
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?
• Diversity – Board– Glass Ceiling– Sexual
Orientation– EEO Reporting
• Gambling• Tobacco
• Health• Environment and
Climate Change• Global Labor
Standards• GMO• Nuclear Power
Some other SRI Issues
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?
• Faith Based Investors• SRI Funds• Small Number of Public Pension
Funds
SHAREHOLDER ACTIVISM COALITIONS
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?
Coalition Organizations• ICCR• Social Investment Forum
– SRI in the Rockies
• Council of Institutional Investors (CII)
• CERES/Investor Network on Climate Risk
• Principles for Responsible Investment (CPRI)
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?
• Faith Based Funds• SRI Funds• TIAA-CREF• Main Stream Mutual
Funds and Investment Managers
• Insurance Companies
• Public Pension Funds• Labor Pension Funds• Foundations• University
Endowments• International Pension
Funds
Today the Coalitions are Broadening
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?
Examples• Climate
Change• Sudan• Shareholder
Rights
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?CLIMATE CHANGE
• Began as value based issue• Called for reduction of CO2 emissions as
a public good: ICCR 1991• Concept of Climate Risk
– Regulatory– Physical– Reputation– Litigation
• Shift from environmental “social” issue to fiscal issue
• Transparency• Opportunities
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?
CLIMATE CHANGE
• U.N. Summits – November 2003, May 2005
• Call to Action• Investor Network on Climate Risk
(INCR)• Call for Public Policy to protect long
term value of investments
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?
CLIMATE CHANGE• INCR – formed November 2003• Call to Action 2003 (10 signers)
– Signed by Public Pension Fund Trustees and Managers
– Labor Pension Funds
• Call to Action 2005 (28 signers)– Also signed by Foundations, European Investors,
Faith Based Investors
• Call to Action 2007 (65 signers)– Corporate CEOs and Asset Managers (both
mainstream and SRI)
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?
TRANSPARENCY
• SEC 10-K: Management Discussion and Analysis
• Sarbanes Oxley• SEC
– Compensation Discussion and Analysis• Global Reporting Initiative (GRI)
– Sustainability Reporting• Carbon Disclosure Project• Global Framework for Climate Risk
Disclosure
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?
SUDAN
• Sudan is not S. Africa
• Global Economy• China
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?
SUDAN• Divestment movement
– Divest Sudan– University Endowments and student movement
• State Legislation– Global Portfolios– Legal Challenges– US Sanctions limit US company divestment
• Constructive Engagement• Lack of effective follow through
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?
• Where we are now – Mainstream Investors
• What’s Out– Screening sin stocks (Tobacco, porn,
gambling)– GMO– Military– Nuclear– Drug Pricing – some but not
mainstream
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?
• What’s IN – Shareholder Rights– Executive
Compensation– Climate Change– Reconcile long
term investors with short investment managers
– Sustainability/GRI– Global Labor
Standards– Diversity– ESG – Principles for
Responsible Investment (PRI)
Where we are now? – Mainstream Investors
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?
Where we are going on:
– Shareholder Rights– Executive Compensation– Climate Change
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?
SHAREHOLDER RIGHTS• Transparency
– Sustainability Reports/GRI– SEC: MD&A, CD&A– Climate: CDP; Global Framework
• Access to the Proxy– HP vote 43%– SEC
• Direct Communication with Board members on important issues
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?
EXECUTIVE COMPENSATION
• Pay for Performance• Disclosure• Options back dating• Say on Pay• Internal and External Pay Equity• Appropriate Benchmarking
Overview History Issue AreasCoalitions Examples Where are we
now? Where are we going?
CLIMATE CHANGE• Risk and Opportunity• Universal Investor• Public Policy – National and
International• The Stern Report
– Pay me now or pay me later– Transfer of cost from now to the
future and from rich to poor– How much and how fast
Questions and Discussion
Donald KirshbaumCT Office of the State Treasurer
Tel: 860.702.3164Email:
