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Florida pension fund boosts ESG strategy
18 October 2013
First state pension fund to launch a strategy limiting ESG risks
The Florida State Board of Administration
The Florida State Board of Administration (SBA) has announced it will adopt a strategy to pair environmental, social and governance (ESG) data with financial risk factors.
The SBA claims it is the first state pension plan to adopt such a strategy. The plan said the reason for using the strategy is to support its corporate engagement efforts and provide a more comprehensive view of its total portfolio risk.
The SBA will use a MSCI ESG portfolio analytics tool to select and monitor asset managers as part of theirand manage portfolios for their exposure to ESG risks and opportunities, including energy efficiency, business supple claims, and data security and privacy.
“Our corporate governance team has long sought to engage companies on sustainability issues so that we have a better gauge of their ESG risks and business management practices,” said Michael McCauley, senior officer for investment programs and governance at the SBA.
“Our corporate governance team has long sought to engage companies on sustainability issues so that we have a better gauge of their ESG risks and business management practices,” said Michael McCauley, senior officer for investment programmes and governance at the SBA.
In addition, the MSCI tool will enable SBA to analyse managed portfolios for exposure to ESG risk factors as well as provide comparisons to standard benchmarks.
“With the coupling of ESG and financial risk data on Barra, we gain a broader view of portfolio risk and aim for better long-term returns from companies that raise their ESG ratings and improve their governance management practices,” added McCauley.
Ash Williams, the plan’s executive director and chief investment officer, said the move would open the door to portfolio managers that want to strengthen their analysis of ESG risks and opportunities.