California Pensions Convene Anti-Sexual Harassment Coalition

An assembly of California-based public pensions representing $635 billion in assets under management have banded together to form Trustees United, a group asserting a hard stance towards sexual harassment and other workplace misconduct. The group’s main endeavor is to encourage other organizations to take significant steps to promote the same message.

The group contends that these violations not only have a compelling adverse effect on corporate culture and human capital management practices, but also create material risks to investment portfolios and financial performance as a result.

“As fiduciaries, we recognize that the recent wave of sexual harassment and misconduct incidents leave companies open to significant operational, financial, and reputational risks,” a statement from the group reads.

Trustees United was founded by members from the California Public Employees’ Retirement System (CalPERS), California State Teachers’ Retirement System (CalSTRS), the Los Angeles County Employees’ Retirement System (LACERS), and the Los Angeles County Employees’ Retirement Association (LACERA).

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The group maintains four foundational principles it believes will guide investors’ actions to manage risk on the issue:

Company directors should publicly share due diligence processes used to respond to sexual harassment and violence complaints by all employees
Transparency in reporting sexual harassment and misconduct settlement costs to investors can help change corporate culture and limit the potential for future financial and reputational risk
Companies must prioritize diversity at all levels
Policies and agreements such as collective bargaining agreements can mitigate risk by addressing power imbalances

“Less visible—but no less real—are the missed opportunities to create long-term value due to the adverse impact sexual harassment and misconduct have on corporate culture. The trustee principles were conceived as a catalyst for expanded engagement on an issue that remains largely invisible to investors,” CalSTRS Vice Chairwoman Sharon Hendricks said in a statement.

The group referenced the Weinstein Company’s declaration of bankruptcy and Wynn Resorts’ sudden loss of $2 billion in value in the wake of sexual harassment claims against their respective executives as “only the most high-profile illustrations of this looming threat.”

Tags: California, Me Too, Pension, Sexual Harassment

The New York State Common Retirement Fund (NYSCRF) is continuing to fulfill its target allocations to real estate and private equity, committing an aggregate $1.2 billion in capital towards the asset classes, according to a recently issued report from the country’s third-largest public pension plan.

The largest commitment was $500 million granted to Vista Equity Partners Perennial, a private equity vehicle that targets mid- to large-capitalization enterprise software businesses in North America. The transaction is representative of an ongoing relationship between the two investors, with the NYSCRF having committed over $2 billion across seven funds, according to the pension’s comprehensive annual financial report.

The second-largest transaction was $400 million committed to Brookfield Strategic Real Estate Partners III, a diversified global opportunistic fund that seeks to acquire positions or control in real estate companies and distressed securities, and direct real estate acquisitions. The NYSCRF committed more than $250 million to the second edition of the fund’s series a few years ago.

The pension scheme continued its exposure towards the real estate asset class with $150 million committed to Niam Nordic VII, a fund that focuses on acquiring commercial real estate in specific Nordic countries, after having secured a commitment to Niam Nordic VI in previous years.

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It then acquired two New York-based housing property mortgages for an aggregate value of $2 million, building out its mortgage portfolio which includes more than 250 holdings based in New York, according to the pension’s 2018 annual report.

A $296 million relationship with the First Pacific Advisors Mid Cap account, a strategy focused on global public equities, was also terminated, according to the report. A spokesperson for the pension did not respond to questions regarding the transaction by press time.

Additionally, the pension committed $114 million to a co-investment strategy with CVC Capital Partners, which will target large-cap companies with potential for cash yield in Europe and North America.

The transactions from the report follow a similar trend by the pension’s previous report, whereby it committed $1.9 billion across its private equity and real estate strategies. In both reports, there was no activity across the $207.4 billion investor’s emerging manager, real assets, absolute return, and fixed income portfolio.

The New York State Employees’ Retirement System, whom the NYSCRF conducts investments for, was 98.24% funded as of March 31, 2018.

Tags: New York State Common Retirement Fund (NYCRF), Pension, Private Equity, Real Estate