Retirement fund adopts policy on social investing; AIPAC urges Texas governor to push divestment

From John Curry, February 28, 2008
Subject: So now...we see the term "social investing," or is it really "social divesting" followed by "social reinvesting" according to politicians' wishes?

The last sentence in this article finally puts the finger on a group who is a major player in the legislatively forced divestiture of public pension funds in the U.S. They have the attention of many U.S. politicians (on both sides of the aisle) as many individuals in this organization are "well-heeled" and donate quite liberally to our legislators.

Did they influence our Ohio politicians re. divestiture of Ohio's public pension funds (House Bill 151 and the related Husted brokered deal with Ohio's pension system's executive directors)? You might want to ask Ohio House Majority Speaker Jon Husted....then again....would he give you an honest answer?

Who do the public pension systems in this country have to please the next time 'round?

John

EMPLOYEE RETIREMENT SYSTEM OF TEXAS

Retirement fund adopts policy on social investing

By Robert Elder
AMERICAN STATESMAN STAFF (Austin, TX)

Wednesday, February 27, 2008

Trustees of the Employees Retirement System of Texas approved a social-investing policy Tuesday designed to have a negligible financial impact on the pension fund, which serves 204,000 active and retired state workers.

The trustees acted in response to pressure for the fund to sell its holdings in companies that do business in Sudan and Iran.

The employee fund, with $24 billion in assets, holds about $234 million in shares in companies linked to the two nations.

Sudan and Iran are the targets of a divestment movement in the United States. Politicians and activist groups are pressuring public pensions to sell shares in companies that do business with regimes widely considered offensive — and in Sudan's case, where militias allied with the government are accused of a campaign of atrocities against ethnic African civilians in the Darfur region. Social-investing initiatives also have surfaced surrounding climate change and other environmental issues.

The new employee fund policy allows its board to take social-investing requests on a case-by-case basis. The board can reject a request, or it can ask its staff to determine the legal and financial impact of the request.

The employee fund's staff would then compile a list of companies whose shares could potentially be sold. Before the fund sells any shares, however, the new policy calls for the system to try to persuade an offending company to change its practices.

And the fund could sell the shares only if it could make another investment that would produce similar returns.

Trustees approved the new policy unanimously if reluctantly.

Trustee Owen Whitworth, a Texas Department of Transportation employee in Austin, said he feared an endless line of social-investing requests.

"The staff's time and talents are valuable, and I do not want to see that time and talent diverted to a long list of socially constrained requests," Whitworth said.

Trustee Craig Hester concurred but said the policy is important because "at least we have some road map on how to proceed." He is president of Hester Capital Management in Austin.

This year, Gov. Rick Perry signed legislation that requires the employees fund and the Teacher Retirement System to sell shares of companies that do business in Sudan.

He also has asked both pension funds to sell shares in Iran-linked companies, hoping to persuade them to get out of the country. Perry's theory is that the strategy could put economic pressure on Iran, which critics say supports terrorism.

The employee fund owns shares in just one company on the state comptroller's list of companies that do business in Sudan: $3.5 million in Alstom, a French power company.

Iran is a different matter.

The employee fund said it holds $229.9 million in shares of companies identified as doing business there by the American Israel Public Affairs Committee, a powerful lobby group that has urged Perry to get state funds to divest from Iran.

relder@statesman.com; 445-3671