US - The board of the US$142bn California State Teachers' Retirement System has voted to support legislation that would address concerns about investing in companies doing business in Sudan.
But the board said it would only support Assembly Bill 2941 if it would indemnify CalSTRS officials and managers for divestment decisions made while applying the fund's new geopolitical risk investment policy in the Sudan.
At a meeting last month, the board adjusted its investment policy by adding a screen for 20 socio/geo-political risk factors for all investments held in the portfolio. The policy also outlines a process for engagement with companies where those factors affect the value of the investment.
According to CalSTRS, that process would include directly engaging companies that violated those policies to seek a change in corporate behaviours and, failing that, the fund would “direct its managers to seek suitable alternative investment opportunities in the affected sectors consistent with CalSTRS fiduciary duties.”
Carolyn Widener (pictured), CalSTRS board chair, described Sudan divestment as an extremely difficult issue for the fund. “As fiduciaries we are required to first consider the consequences of the unrest in the Sudan to the value of the fund,” said Widener.
“For that reason, we developed a comprehensive geopolitical risk policy we intend to use for companies doing business in the Sudan.
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