Disclosure of ESG investing strategy for Illinois public funds ready for governor’s desk

Investment managers of Illinois public funds, including pension systems, must disclose how they integrate environmental, social and governance investment strategies with a bill queued for the governor’s desk.

House Bill 2782 is an initiative of Illinois State Treasurer Michael Frerichs. State Sen. Ram Villivalam, D-Chicago, explained what the measure requires.

“It amends the Sustainable Investing Act to require investment managers prior to their selection as a fiduciary to a public body or a public pension system to disclose to that body or system how they integrate sustainability factors into their investment decision making,” Villivalam said.

The list of various considerations include corporate governance and leadership.

“Which also means transparency in reporting, shareholder rights, ethical conduct, yes it includes environmental factors,” among others, Villivalam said.

State Sen. Jason Plummer, R-Edwardsville, took issue with the proposal and said there’s no data to suggest investing with the focus on ESG increases fund performance.

“The data shows that long term, companies that focus on these policies and investment managers that put these policies ahead of traditional investment philosophies generate a lower return over the medium and long term for their investors,” Plummer said.

Plummer characterized such investment strategies as trendy and not good for taxpayers or pensioners.

“Long term, this hurts the people of Illinois, it hurts our pensioners and it guarantees that our investments will continue to underperform the pension systems of many other states,” Plummer said.

The measure passed along party lines and can now be sent to the governor’s desk.