What is Sustainable Investing?
Letter from Michael Frerichs, the Illinois State Treasurer
My approach to sustainable investment is grounded in fiduciary duty. As a fiduciary, my primary goal is to maximize financial returns. Integrating sustainability is not in contradiction to this goal. Fiduciary duty, in my view, calls for active oversight, prudent risk management, and responsible governance. Consequently, it requires consideration of material risks and long-horizon opportunities, including those related to sustainability.
The widespread attack on sustainable investment and diversity, equity, and inclusion lacks substance and conviction. While opponents are working to force their own values into the way we make investment decisions, they have failed to make a convincing argument for why their approach is financially beneficial or material. We know that workers are an important asset to companies and should be treated as such, we know that diverse teams are in an enhanced position to make better decisions, and we know that climate change is already and will continue to impact the economy and environment. That’s why I expect companies to manage sustainability risks that have the potential to hinder their long-term profitability, rather than ignoring them to appease political whims.
My staff and I continue to look past the noise and focus on the things that truly matter. Our goal is to achieve sustainable and durable investment returns over the long term. My team incorporates sustainability factors into our decision-making, particularly because that approach can improve investment performance and lead to a more resilient, inclusive, and sustainable global economy. Our office considers it a key part of our fiduciary duty to assess all material risks that may have an impact on companies’ long-term value.
“The investment decisions we make today will have a profound, lasting impact on our economy, our environment, and our quality of life for generations to come.”
Michael Frerichs
Illinois State Treasurer