Public pension funds and other state and local government entities are increasingly incorporating environmental, social, and corporate governance (ESG) considerations into investment decisions. These considerations are used to assess a company’s societal impact before investing (or continuing to invest) in the firm.
While private investors are free to utilize whatever assessments they deem most valuable, ESG assessments are rightly seen by many as out-of-scope for public pension systems and other investments of taxpayer-sourced funds. Public pension trustees, for example, are required by state laws to exercise their fiduciary responsibilities to maximize public pension systems’ investment returns at acceptable levels of risk
