PLANSPONSOR - December 2022-February 2023 - 32

Exploring ESG Investing
Conference Coverage
terrific if you can have both, " he observed.
Michael Kreps, co-chair
of the
retirement services and fiduciary group
at Groom Law Group, Chartered, noted,
however,
that political and moral views
can cloud the judgment of any fiduciary,
regardless of how that person weights ESG
factors. " If you really hate shoes, you won't
want to invest in shoe shops no matter how
profitable they are, " Kreps quipped.
He urged fiduciaries to focus on
their clients' or participants'
interests
and to consider the fact that retirement
benefits are a social good, in and of
themselves. -Paul Mulholland
An ESG Path
Forward
How have professional investors already
embraced
the
environmental,
social
and governance option? In " An ESG
Path Forward, " the panel's moderator,
FS [Financial Standard] Sustainability
Managing Editor Rachel Alembakis,
asked asset allocators Zach Stein and
Andrew Siwo for their insights into implementing
an ESG and sustainable strategy.
Stein is c0-founder and CEO of
Carbon Collective, which works with
individual retirement accounts, brokerage
accounts and trusts to help clients become
more invested in green, sustainable stock
and bond portfolios specifically built for
resolving climate change. The company
offers robo-adviser services, similar to
Betterment or Wealthfront, to individual
investors with an average account size of
roughly $50,000. Stein manages a portfolio
of 192 companies.
" We work with one organization at
a time to make sure it gets 401(k) plan
options that align with its mission, "
Stein noted.
This approach differs from that of
Siwo, director of sustainable investments
and climate solutions at the New York State
" We view ESG as a tool in identifying
risks and opportunities. We do not
view it as an asset class. "
Common Retirement Fund. The $258
billion fund, which is the state's public
pension system, is 103% funded, per the
comprehensive annual financial report for
the past fiscal year, and has a $20 billion
commitment
to sustainable investment
and climate solutions that he oversees as
portfolio manager. In this role, he identifies
investments across asset classes that
are accretive to the fund's portfolio and
meet sustainability goals.
" We view ESG as a tool in identifying
risks and opportunities, " Siwo said. " We
do not view it as an asset class. "
Although ESG may be a tool, Siwo
oversees what he calls " an asset-driven
approach " in the portfolio, with allocation
to real estate, opportunistic credit, private
and public equity, private and public debt
and real assets.
" The approach is successful because
the underlying guidelines and expectations
are the same. When I began two
years ago, we were at $8 billion, and now
we're just under $19 billion. In the past
two years, we've put quite a lot of capital
to work, " he said.
Siwo pointed to four ESG approaches,
cited by the CFA [Chartered Financial
Analyst] Institute, that various managers
use. These are thematic, active/engagement,
best in class and ESG integration.
" In addition, you have SRI [socially responsible
investing] and impact investing, and
those terms sometimes can be conflated.
" Our approach is a sustainable
investment approach, so we have a flavor
of all of those investment styles, " he said.
Stein engages with corporate manage32
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32 PLANSPONSOR.COM December 2022 - February 2023
ment in pursuit of sustainable outcomes
from the company's operations.
These efforts inform his investment
strategy and how he selects the portfolio
that he recommends plan sponsors put
on their investment menu. Stein said
he focuses on companies in which he
believes shareholder pressure can maximize
value.
" These are the companies we hold,
because that's where we can apply shareholder
pressure, " Stein said.
" Shareholder
pressure is a very important tool in
this toolbox, but there is an opportunity
cost that exists [so holding these companies
maximizes value]. And, thirdly, the
companies that we don't invest in are
companies whose core business could
not exist in a post-carbon world. We
don't hold these companies, because we
cannot adequately pressure them into
making changes [toward climate ends]. "
-Dusty Hagedorn
Available
On Demand
You may register to view
all sessions on demand
until February 10, 2023, by
visiting the PLANSPONSOR
Events page, or by visiting
PLANSPONSOR.com/
ESG2022.
http://www.PLANSPONSOR.com/ http://www.PLANSPONSOR.COM
PLANSPONSOR - December 2022-February 2023

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