Jan. 15, 2021
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Public School Employees’ Retirement System
Pa. PSERS Board of Trustees Continues its ESG Investment Education
Trustees receive annual investment training and education
HARRISBURG – The Pennsylvania Public School Employees’ Retirement System Board of Trustees held its second sustainable investing education session at a public meeting on Thursday.
These education sessions are part of the Board’s efforts to proactively study financial and corporate trends that could impact investment returns of the $63 billion pension fund.
Sustainable investing is also known as ESG, an acronym for an investment practice that examines how well a company incorporates certain Environmental, Social and Governance standards into its operational practices to maximize returns while bettering their employees, customers or clients, and society in the process. The concept started in the 1950s among niche investors, and it has become more mainstream as institutional and individual investors focused on trying to restore public trust in capital markets following the 2008 financial crisis, according to Harvard Law School Forum on Corporate Governance.
“ESG can be a sensitive topic in part because there are no defined industry standards,” Susan Oh, PSERS Director of ESG Research and Currency Hedging, said Thursday. “The ESG investing we are researching is not focused on divestment or advocating for social change. The emphasis is on the long-term sustainability of investment returns, which aligns with the plan’s long-term investment horizon. We are focusing our program on ESG’s governance pillar to better understand how to best position assets to benefit from the future of innovation and society.”
Ms. Oh led the Board’s first virtual ESG panel discussion with industry experts in December. On Thursday, Ms. Oh led a second virtual panel discussion with representatives from Baillie Gifford & Co., an investment management firm headquartered in Edinburgh, Scotland. The firm has integrated ESG into its investment process for several decades and has managed assets for PSERS for almost two decades.
Long-term investors, he said, have the benefit of time and technology to best implement ESG practices, said Tom Walsh, a Baillie Gifford Investment Manager who served as a panelist. Analytical tools can be used to measure companies’ internal and external performance to prevent management from making questionable or poor decisions that could hurt performance or cause reputational harm, he said.
The ESG sessions were conducted in accordance with Pennsylvania law that requires PSERS Board of Trustees annually earn at least 10 hours investment education. In 2020, trustees collectively earned more than 360 hours of investment-related education and ethics training.
About the Pennsylvania Public School Employees' Retirement Syste
PSERS, founded in 1917, began operations in 1919 to oversee a statewide defined benefit pension plan for public school employees. PSERS' role expanded upon the passage of Act 5 of 2017 to include oversight of two new hybrid options consisting of defined benefit and defined contribution (DC) components and a stand-alone DC plan. As of Sept. 30, 2020, PSERS had net assets of approximately $60 billion and a membership of about 256,000 active, 240,000 retired school employees and 26,000 vested inactive members.