Home > News > Risk > New Jersey Making Big Push on ESG Investing
Risk

New Jersey Making Big Push on ESG Investing

State pension system targets arms sales, using contractors instead of employees, and foreclosures on hurricane victims.

By Chris Butera

Since Gov. Phil Murphy took office in January, New Jersey has been pushing environmental, social, and governance (ESG) concerns in its pension investments.

In March, New Jersey withdrew its holdings in all automatic and semi-automatic firearms companies, following a nationwide divestment pattern in pension plans after a mass of shootings. In recent months, it also pressured two private equity firms against foreclosing on Puerto Ricans affected by Hurricane Maria and told Target not to work with trucking companies that see their drivers as contractors rather than employees.

This is just one step in an ESG policy the Garden State is working on for its pension investments; it also aims to tackle corporate governance reforms. There are 30 states that have adopted ESG policies for their pension funds, NorthJersey.com reports.

Chris McDonough, director of the investment division of the $77 billion State Investment Council, the agency that runs New Jersey’s pension funds, told NorthJersey.com that “ESG forces you to take a longer view.” McDonough will be leaving his post at the end of the month for a co-CIO role at consulting firm Investment Performance Services.

For more stories like this, sign up for the CIO Alert newsletter.

Murphy, a Democrat, is a big proponent of ESG investing, often speaking of a “fairer” economy as well as advocating tighter gun control laws. Prior to politics, he was an executive at Goldman Sachs.

However, at 31%, New Jersey is the worst-funded state in the country. Credit rating agencies are pushing for funding increases to its retirement plans, and a 2016 study by the Center for Retirement Research at Boston College shows funds with divestment policies earned 0.4 percentage points less than other plans. The state’s 2018-2019 fiscal budget pledged $3.2 billion toward benefit payments, but it was still less than the actuarial recommendations.

Tags: , , , ,

Home > News > Market Moves > Labor Participation Is Up, so Fed Should Cool It, Economist Says
Market Moves

Labor Participation Is Up, so Fed Should Cool It, Economist Says

Natixis’ Joseph Lavorgna thinks better news on jobs means the Federal Reserve should end the rate hikes.

By Larry Light

The June employment report showed a healthy increase of 213,000 jobs. But most heartening of all, the labor participation rate nudged up after a long down trend.

And that, said Joseph Lavorgna, chief economist for the Americas at investment bank Natixis, means that “the Fed will have even less reason to raise rates.” Lavorgna has said that the central bank should keep the benchmark federal funds rate at 2%, which is close to its current level.

The participation rate has tumbled from 66.2% of the working age population (16-64) in 2008, at the start of the Great Recession to just below 63%, according to the US Bureau of Labor Statistics. In June, it inched up to 62.9% from 62.7% in May. June’s reading marks the eighth time the rate has hit 62.9% over the past two years, and it reached 63.0% three times. This suggests that so-called discouraged workers are being attracted back to the jobs market.

More important, as Lavorgna pointed out in a research note, an upward trend is building for the “prime age” working population (25 to 54).

For more stories like this, sign up for the CIO Alert newsletter.

The Fed, which has raised rates twice this year and is expected to post two more increases in 2018, is keeping an eye on the ever-tighter labor market to see if it threatens to boost inflation to an unacceptable level. Private-sector wage growth over the past 12 months rose to 2.7% in June, which is better than the showing in recent years, but hardly overheated.

Inflation has been tame of late, hitting 2.0%, excluding volatile food and energy.

Tags: , ,

«