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Pensions & Investments: Large investors urge Russell 1000 companies to adopt ESG practices

By Barry B. Burr and Timothy Inklebarger
Pensions & Investments
California Public Employees’ Retirement System, California State Teachers’ Retirement System and other major institutional investors called on the 1,000 largest U.S. companies to “embrace a new reality” and imbed environmental, social and governance concerns into their business models.

California Public Employees’ Retirement System, California State Teachers’ Retirement System and other major institutional investors called on the 1,000 largest U.S. companies to “embrace a new reality” and imbed environmental, social and governance concerns into their business models.

In a jointly signed letter sent Friday to the CEOs of all the companies in the Russell 1000 index, the investors asked them to actively integrate the sustainability issues in their actions and investor disclosures, according to a statement from Ceres, a coalition of investors, environmental groups and others, which helped coordinate the effort.

“Environmental and social sustainability issues can no longer be considered off-balance-sheet issues,” the letter said. “Rather they are material, financial issues posing both risks and opportunities to the long-term success of corporations.”

The letter urges companies to use a Ceres-developed tool to assist in developing strategies and actions to include sustainability in all aspects of their business, the statement said.

“We’ve seen enough hidden financial risks with globally damaging economic results in recent years,” Mindy Lubber, Ceres president, said in the statement. “The collapse of financial markets, the BP oil spill, the Massey coal mine disaster and other mishaps make clear it’s time that companies operate with a clear view of all their risks and costs — but also the tremendous opportunities open to those businesses across all sectors who compete by developing solutions to environmental and social issues.”

Andrea Moffat, vice president of corporate program, said in a telephone interview that Ceres plans to provide additional guidance to companies on the tool designed to assist the companies incorporating ESG into their business models.

“The response we’re looking for is companies talking about ESG risk and opportunities in their engagements with the investment community,” through 10-K filings, annual or quarterly meetings or special investor newsletters, Ms. Moffat said.

Other signatories among the 31 include Thomas DiNapoli, New York state comptroller and sole trustee of the $140.6 billion New York State Common Retirement Fund; John C. Liu, New York City comptroller who oversees the $118.5 billion New York City retirement systems; $11.7 billion Illinois State Board of Investment; $17 billion United Methodist Church General Board of Pension and Health Benefits; Calvert Asset Management; Walden Asset Management; Pax World Management Corp. and Generation Investment Management.

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