Key Takeaways
- • Chicago Teachers' Pension Fund trustees voted in October 2022 to engage fossil fuel companies and invest in clean renewable energy to offset the fund's fossil fuel holdings, targeting completion by the end of 2027.
- • As of September 2022, the fund held approximately $350.4 million in coal, oil and gas-related publicly traded debt and equity, about 3.3% of total fund assets.
- • The fund's divestment approach is multi-pronged: engagement with current holdings first, with a longer-term goal of divesting publicly traded fossil fuel positions.
- • The decision followed a yearlong study, educational sessions on ESG investing, and investment beliefs approved earlier in 2022.
- • The fund is also researching joining an investor network to coordinate engagement and proxy voting strategies.
Summary
The Chicago Teachers' Pension Fund trustees voted in October to engage with fossil fuel companies and encourage their shift toward clean renewable energy, while investing in viable clean and renewable energy sources to offset the fund's fossil fuel investments. The fund aims to achieve this by the end of 2027, according to the article, which was based on a statement shared with Chief Investment Officer.
Fund CIO Fernando Vinzons described a multi-pronged approach. In his statement, he said the fund will engage current companies toward clean renewable energy while working toward the longer-term goal of divesting from publicly traded fossil fuel holdings. He acknowledged that divestment does not attract consensus among institutional investors, noting that many public pension funds are engaging with energy producers, some are divesting, and some state funds, such as Louisiana's, are allocating away from managers perceived to be harming the domestic energy sector through programs like the Net Zero campaign.
Executive director Carlton W. Lenoir, Sr. commented in a fund press release that, as fiduciaries, trustees must invest consistently with the fund's mission to protect and enhance the present and future economic well-being of members, pensioners, and beneficiaries, and that the fund is confident the action fulfills that responsibility. The decision was the culmination of a yearlong study. Trustees had previously attended educational sessions on ESG-based investing and implementation options and approved a set of investment beliefs earlier in 2022.
As of September 2022, the fund had approximately $350.4 million in coal, oil and gas-related publicly traded debt and equity investments, roughly 3.3% of the total portfolio. The article cites a 2021 Callan survey finding that 49% of institutional investors incorporated ESG factors into investment decisions, a 123% increase since the survey's 2013 inception. Respondents cited aligning portfolios with organizational values or meeting fiduciary responsibility. Vinzons also said the fund is researching membership in an investor network that would allow it to amplify its voice through collaborative engagement and proxy voting strategies.
Fund CIO Fernando Vinzons described a multi-pronged approach. In his statement, he said the fund will engage current companies toward clean renewable energy while working toward the longer-term goal of divesting from publicly traded fossil fuel holdings. He acknowledged that divestment does not attract consensus among institutional investors, noting that many public pension funds are engaging with energy producers, some are divesting, and some state funds, such as Louisiana's, are allocating away from managers perceived to be harming the domestic energy sector through programs like the Net Zero campaign.
Executive director Carlton W. Lenoir, Sr. commented in a fund press release that, as fiduciaries, trustees must invest consistently with the fund's mission to protect and enhance the present and future economic well-being of members, pensioners, and beneficiaries, and that the fund is confident the action fulfills that responsibility. The decision was the culmination of a yearlong study. Trustees had previously attended educational sessions on ESG-based investing and implementation options and approved a set of investment beliefs earlier in 2022.
As of September 2022, the fund had approximately $350.4 million in coal, oil and gas-related publicly traded debt and equity investments, roughly 3.3% of the total portfolio. The article cites a 2021 Callan survey finding that 49% of institutional investors incorporated ESG factors into investment decisions, a 123% increase since the survey's 2013 inception. Respondents cited aligning portfolios with organizational values or meeting fiduciary responsibility. Vinzons also said the fund is researching membership in an investor network that would allow it to amplify its voice through collaborative engagement and proxy voting strategies.
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