National Association of State Retirement Administrators


ESG - Environmental, Social and Governance

ESG Considerations

In its paper, Environmental, Social, and Governance Issues in Investing; A Guide for Investment Professionals, the CFA Institute identifies issues commonly included within the ESG framework:

Environmental Issues Social Issues Governance Issues
Climate change and carbon emissions Customer satisfaction Board composition
Air and water pollution Data protection and privacy Audit committee structure
Biodiversity Gender and diversity Bribery and corruption
Deforestation Employee engagement Executive compensation
Energy efficiency Community relations Lobbying
Waste management Human rights Whistleblower schemes

According to a May 2018 report on ESG by the Governmental Accountability Office (GAO), relatively few retirement plans in the U.S. incorporate ESG principles into their investment process, and the use of ESG investing is more common among pension funds in Canada and Europe. The report recommended that the Employee Benefits Security Administration (EBSA) provide further clarification and guidance regarding ESG investing:


Fiduciaries may have difficulty determining appropriate issues to consider in investment management involving ESG factors. Fiduciaries that decide to pursue using ESG factors may face difficulty identifying and evaluating available options. Lastly, without additional information plans may be reluctant to pursue ESG strategies because they do not understand risks that could be considered material and they may not be able to effectively select and monitor an ESG strategy.

NASRA's Position

NASRA does not have a position specifically on ESG. NASRA's resolution 2019-02, – Support for Strong Fiduciary Standards in Retirement System Investments, states, in part, that NASRA:

  1. Supports strong fiduciary standards set in law by state and local governments and supports investment strategies for which the paramount goal is the financial security of pension fund assets.

  2. Opposes any attempt, either implicitly or explicitly, to direct or influence state and local government retirement system investments that circumvent the trustees' fiduciary responsibility.

Other Resources

The resources listed below do not necessarily reflect the views of NASRA and are provided for information only.