TRS Texas proposes adding ESG to policy statement

The proposed amendment would see the public pension scheme ‘consider ESG factors’ in investments insofar as ESG affects risk and returns.

TRS Texas
Neil Randall, TRS Texas’s managing director, private equity, and Katy Hoffman, chairman of the pension’s internal investment committee, at the July meeting of the investment management committee

The investment committee of the Teacher Retirement System of Texas is considering adding ESG wording to its investment policy statement. The proposed clause would require the pension’s investment division to “consider ESG factors” relevant to risks and returns.

The proposal was presented to TRS Texas’s investment management committee on 15 July by Katy Hoffman, chairman of the pension’s internal investment committee. In September, the proposal will be presented to the policy committee, which may recommend to the executive board that the clause be added to the investment policy.

“We were falling behind other public pension funds in that the majority of other public pension funds had a reference to ESG in one of their governing documents,” said Hoffman in the committee meeting. “The key part that I’ll point out here is that any investing will be done with our fiduciary duty in mind seeking good risk and return.”

The proposed clause states: “In making investment decisions, the investment division will consider ESG factors that are material to long-term returns and levels of risk. All investments must be made prudently and in accordance with fiduciary and ethical standards, without promoting interests unrelated to the portfolio’s stated objectives of controlling risk and achieving a long-term rate of return.

“The Investment Division will report at least annually to the Board on the Trust’s ESG efforts, methods and results.”

TRS Texas has $174 billion in assets, 32.9 percent of which are allocated to alternatives.

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