The debate over adhering to environmental and sustainability goals at the perceived expense of not fulfilling one’s fiduciary responsibility to maximise financial returns continues. Last week, Kentucky County Employees Retirement System voted to approve a letter to its state treasurer advising that the pension would not divest from any of the 11 financial institutions that the treasurer’s office has said is boycotting energy companies, our colleagues at Responsible Investor report (registration required).
It isn’t clear whether Kentucky CERS’s relationships with those financial institutions – which include BlackRock, BNP Paribas and Schroders – cover private markets. CERS is the latest US pension to push back against anti-ESG-driven fossil fuel divestments: Indiana Public Retirement System has warned that requiring it to divest from certain managers over fossil fuel issues could cause a significant reduction in investment returns.
US pensions appear to be between a rock and a hard place when it comes to fossil fuel divestments versus what they see as their fiduciary responsibilities, regardless of which side of the argument they land on.