IN RESPONSE TO COUNCILMEMBER GILMORE RICHARDSON’S RESOLUTION, PHILADELPHIA BOARD OF PENSIONS ADOPTS ESG INVESTMENT AND CLIMATE RISK DISCLOSURE POLICY

In Council News, Katherine Gilmore Richardson, News by PHL Council

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(PHILADELPHIA) April 27, 2021 – Last Thursday, April 22, the Board of Pensions and Retirement adopted sustainable investing language into its investment policy statement in response to Councilmember Gilmore Richardson’s resolution calling for this action, which was introduced in January and passed in City Council in March.

“We are obligated to consider the biggest risks posed to our financial system, and climate change remains a primary threat,” said Councilmember Gilmore Richardson. “I introduced this resolution and worked closely with the Pension Board on it because we know that we must integrate climate action into every function of our City government. I want to thank the Pension Board Members, Staff, and Consultants for quickly acting on City Council’s call to adopt this language and integrate ESG language and climate risk disclosure into its investment policy statement.”

During the Thursday, April 22nd Pension Board meeting, the Board adopted the following language into its investment policy statement (“IPS”):

“The Board’s paramount objectives in its investment decisions are to achieve safety of principal and optimal total return. When appropriate to fulfill its fiduciary duties to achieve those objectives, the Board will consider, among any other relevant prudential factor, applicable sustainability factors in evaluating investment managers and making investment decisions. Such factors include but are not limited to:

(1) corporate governance and leadership factors (i.e. diversity, equity, and inclusion, board diversity, executive pay, conflicts of interest);

(2) environmental factors (i.e. climate change, disclosure of climate risk information, thermal coal exposure, water and waste management, energy efficiency);

(3) social and human capital factors (i.e. labor relations, supply chain management, consumer health and safety, data protection and privacy).

The CIO and Investment Staff, in conjunction with its Investment Consultant, will perform periodic evaluations and strategic tracking of these factors. The CIO and Investment Staff are authorized to request information relevant to these factors from prospective or current investment managers. When consistent with its fiduciary duty, the Board may use active ownership strategies to promote consideration of ESG factors.”

Following discussion among the Board Members, Staff and the Board’s Consultant, the Board approved a motion to adopt this IPS policy language to formalize the Board’s existing practices in applying and tracking ESG factors, including climate change-related risk disclosures, in its investment portfolio and decisions.

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