There is a new movement on Wall Street, and Bucks County leaders are paying attention. According to the 2020 Global Alternative Fund Survey, nearly all investors (88 percent) asked their fund managers how Environmental, Social and Governing principles were incorporated into their investment decision making.
ESG investing concentrates on companies that emphasize sustainability as well as protecting the environment in their manufacturing plants and products. It also looks to see if the company is socially responsible by prioritizing human rights among its dealings with the public, with its employees and even with other countries. In addition, it examines if a company’s management is diverse, if executive pay is reasonable, and if the company responds to their shareholders responsibly. Finally, ESG investing asks whether company is ethical and transparent in their accounting and business practices.
Along with Bucks County Controller Neale Dougherty, I, as Treasurer, sit on the Retirement Board for the county pension fund, which now has over a billion dollars in investments; and we asked our fund managers about devoting a portion of the fund to investments in ESG companies.
Before committing any funds to such an investment, our board reviewed the returns that such investments have earned. We found that according to the US SIF Foundation’s 2020 trends report, U.S. assets under management using ESG strategies grew by 42% from 2018 to 2020. In addition, a white paper by Morgan Stanley Institute compared the total returns of sustainable mutual and exchange-traded funds and found they were like those of traditional funds. Other studies have found that ESG investments can outperform conventional ones.
This supports the proposition that younger Next-Gen investors are increasingly looking to influence the world by responsible investing. Their desire for directing investments to ESG companies gives a boost to those stocks above and beyond the financial evaluation of their businesses. We want Bucks County’s pensioners, and its taxpayers, to take advantage of this trend.
As a result, we have voted to devote a small initial portion of the pension fund to ESG companies. If this investment shows a strong upward trend, we intend to increase it. Not only will this benefit the fund financially, but we can also take pride in helping the environment and society at the same time—a “win, win” proposition that everyone can support.
As far as I am aware, we in Bucks County are among the very few innovators to take this approach in Pennsylvania. Hopefully, other public entities with pension funds and other long-term investments will join this trend—that would further benefit our ground floor investments, but also it would encourage more companies to seek to maximize their ESG compliance. That would increase the benefits to our environment and society.
This is just another example of how your votes can affect not just your neighborhoods, but also our entire nation and world. At the county level where I sit, I am honored to be a part of a forward-thinking administration which has the ability to lead Pennsylvania in contributing to the overall good for all.