ESGDecember 17, 2024

Maryland Pension to Add Climate Advisory Panel

The board of the Maryland State Retirement and Penson System seeks three outside experts to assist the fund in achieving a sustainable portfolio.

Reported by Matt Toledo

The board of the Maryland State Retirement and Pension System approved a charter at its Tuesday board meeting that establishes a climate advisory panel to advise the board of trustees and the pension fund’s investment division on developing and achieving a long-term sustainable portfolio.

The fund seeks to hire at least three outside experts to this panel. The panelists should be experienced in climate science and climate economics and should have diverse backgrounds that include climate research, investment management, climate change policy and climate risk.

The charter for the establishment of the climate advisory panel was approved by the administrative committee of the board on December 4, a spokesperson for SRPS said. The charter then was submitted to the board, who approved it today.

“By establishing this advisory panel, we can leverage outside expertise and work collaboratively as we establish a path to a long-term sustainable portfolio consistent with our fiduciary duties,” said Maryland State Treasurer Dereck E. Davis in a statement.

While pension funds in some states, such as Maryland and California, push forward with sustainability initiatives, other states are banning funds from considering environmental, social and governance factors in investments. In Indiana, BlackRock was terminated as a fixed-income manager for the Indiana Public Retirement System due to the firm’s ESG commitments. A newly passed bill in Ohio bans the state’s funds from considering ESG factors in investment decisions.

The Maryland SRPS is accepting expressions of interest from candidates to serve on the panel, according to the release. The SRPS is a signatory to several net-zero and sustainability initiatives, such as the Climate Action 100+ and the Ceres Investor Network.

Since 2019, SRPS investment staff has evaluated environmental, social and governance risks for its investments, as well as external manager policies for addressing such risks. The fund also began managing some assets internally, according to the fund’s 2022 ESG Risk Committee report. Previously, these functions were addressed by external managers.

“Creating this climate advisory council will ensure that Maryland’s pension system can be at the forefront of seizing opportunities to ensure we are generating excess returns for our beneficiaries,” said Brooke E. Lierman, Maryland’s comptroller, in a statement. Lierman sponsored legislation in 2022 that led to the establishment of the climate advisory panel.

“I am confident that if used correctly by our system, the expertise we will bring in through this new council will allow for innovative investments that make our system more profitable with less risk over the long term,” Lierman continued.

Per the state’s Climate Pollution Reduction Plan, established in December 2023, Maryland aims to achieve zero greenhouse gas emissions by 2045. The plan also calls for reducing statewide emissions by 60% from 2005 levels and achieving net-zero emissions from large buildings.

In June, Maryland Governor Wes Moore signed an executive order to advance the pollution reduction plan.

The Maryland SRPS system manages $66 billion in assets, as of January 31, and has 168,000 retirees and beneficiaries and 245,000 active and former members.