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September 05, 2002
Pension Funds, Fiduciary Duty, and SRI
    by William Baue

An interview with Meredith Miller from the Connecticut State Treasurer's Office gives some insight into why the State of Connecticut is increasingly embracing SRI.


This Sunday, the inaugural Green Mountain SRI Summit will convene in Stowe, Vermont. The conference will address a wide spectrum of issues regarding socially responsible investing (SRI), including how institutional investors can adopt SRI strategies. One of the participants will be Meredith Miller, assistant treasurer for policy at the Connecticut Retirement Plans and Trust Funds (CRPTF).

CRPTF is one of a growing number of institutional investors that have integrated SRI strategies into their investment process. For example, CRPTF has engaged in shareowner action with companies such as the Stanley Works (ticker: SWK) and EMC (EMC).

Ms. Miller will moderate a panel on the opening day of the conference entitled "Determining Your Approach--Equity Investing, Community Investing, and/or Shareholder Advocacy?" SocialFunds.com recently spoke with Ms. Miller about CRPTF's approach to SRI strategies.

SocialFunds.com: Why is the Connecticut Retirement Plans and Trust Funds attending the Green Mountain SRI Summit?

Meredith Miller: We're attending the summit primarily because the Treasurer of the State of Connecticut, Denise Nappier, has established a program at the Treasury that seeks to hold the companies we invest in to standards of good corporate citizenship. The Treasurer's strategies have ranged from community reinvestment to a series of shareholder initiatives and exploring--but at this point not implementing--screening for the funds beyond those required by state law for compliance with the MacBride Principles.

SF: Is the Treasurer's implementation of SRI strategies motivated primarily by social and environmental concerns or by the financial considerations of fulfilling your fiduciary responsibility?

MM: The Treasurer believes that environmental, social, and economic issues are inextricably tied to the financial performance of our portfolio company investments. That view is consistent with Connecticut law. We have a law that directs the Treasurer, in every investment she makes, to consider the implications of the economic, social, and environmental effects of those investments.

There are several reasons why this is important. One is the belief of the Treasurer that you need not sacrifice fiduciary responsibility by taking into consideration the economic, social and environmental implications of an investment. And the reason she believes it is possible not to sacrifice fiduciary duty is because of the due diligence she requires for those kinds of initiatives.

The bottom line is that if a public fund does its due diligence--taking into account that social, environmental, and economic implications can have an impact on the financial bottom line--then we believe it is possible to not only pursue your fiduciary duty, but that it is part of your fiduciary duty.

SF: When was the law you are referring to implemented?

MM: Several decades ago. It's not a recent law.

SF: Do you see foresee the Connecticut State Funds implementing screens?

MM: In the Nappier administration, we have chosen to lead with being a shareholder activist as a way to bring those issues through because of the effect we can have on a company while we have ownership in that company. Thus far, we have not started actually screening the funds. It's been very difficult to take a fund like our $18-20 billion fund and screen it across the board.

We are working to understand what options are available. What are the appropriate applications for a public fund? Can public funds screen only a portion of their portfolio and what would be the justification? What are the issues public funds should screen on and how does a fund decide which issues to include and which not to include? Rather than screening the fund, would it make better sense to take some fund money and put it into a socially responsible fund as opposed to screening your own fund? These are really important questions. I think a lot of public funds are still trying to understand how they can use socially responsible screens.

That's why I think the conference will be so strong, because it will bring together research and best practice applications so funds can see how to go about implementing SRI policies.

 

 
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