
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 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:
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.
Opposes any attempt, either implicitly or explicitly, to direct or influence state and local government retirement system investments that circumvent the trustees' fiduciary responsibility.
Understanding the Role of ESG and Stakeholder Governance Within the Framework of Fiduciary Duties, Harvard Law School Forum on Corporate Governance, November 2022
?State-Level ESG Investment Develompents Tracker, Debevoise & Plimpton, updated January 10, 2023
DOL Proposes to Crack Down on ESG, Groom Law Group, June 2020
Retirement Plan Investing: Clearer Information on Consideration of Environmental Social and Governance Factors Would Be Helpful, Government Accountability Office, May 2018
ESG Investing and Public Pensions: An Update, Center for Retirement Research, October 2020
Environmental, Social, and Governance Issues in Investing; A Guide for Investment Professionals, CFA Institute, October 2015
Model ESG Contract Language, Center for Inclusive Capitalism
Principles for Responsible Investment, United Nations
ESG Brief: ESG Pension and OPEB Analysis in US Public Finance, S&P Global, October 2021
Where's the 'F' in ESG?, Wilshire Associates, March 2018
Sustainable Investing in Defined Contribution Plans, Defined Contribution Institutional Investment Association, May 2019
Environmental, Social, and Governance (ESG) Investing: An Evaluation of the Evidence, Wayne Winegarden, Pacific Research Institute, May 2019