WEST SACRAMENTO, Calif.–(BUSINESS WIRE)–A coalition of trustees from several long-term institutional investors,
with combined assets of more than $635 billion, has come together to
create and promote the Trustees
United Principles. These principles seek to ensure portfolio
companies are working toward providing workplace cultures and
environments that are safe, free of sexual harassment, violence and
misconduct. The principles focus on human capital management strategies
that attempt to mitigate and reduce future risks, which is a priority
for the trustees and their respective institutions that invest with a
focus on long-term value creation.
As fiduciaries, the trustees involved in this effort recognize that the
recent wave of sexual harassment and misconduct incidents could leave
companies open to significant operational, financial and reputational
risks. If left unmonitored, these risks have the potential to do
long-term damage to companies’ bottom line and consequently to the
pension funds’ portfolios.
“Speaking on behalf of the trustees, we have a fiduciary
obligation to our beneficiaries to take responsible actions to engage,
monitor and mitigate human capital management risks,” said California
Public Employees’ Retirement System Board President Priya Mathur. “This
is a joint assertion that trustees and investors alike have a stake in
engaging companies to promote policies that reduce incidents of sexual
harassment, violence and misconduct and provide safe, supportive, and
California State Teachers’ Retirement System Board Vice Chair Sharon
Hendricks added, “From my perspective, as a representative of the
trustees for the world’s largest educator pension fund, our concern goes
beyond the immediate fall in company value. 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
Signatories currently include trustees from: CalPERS; CalSTRS; the Los
Angeles City Employees’ Retirement System; and, the Los Angeles County
Employees’ Retirement Association.
The trustees involved in this effort already focus on corporate
governance engagement strategies, at their respective institutions,
which address gender, racial and ethnic diversity issues across their
institutions’ portfolio companies, including: general staff, C-Suite
leadership and the composition of their boards of directors. Like the
institutions for which they are trustees, they see data transparency and
disclosure of this issue as essential to support decisions on where and
how to deploy their capital.
The Trustees United Principles are:
“Principle 1: Corporations must ensure a work environment free of sexual
harassment and violence. Boards must support the right of employees,
both individually and collectively, to safely bring forward claims of
sexual harassment and violence. Company directors should publicly share
due diligence processes used to respond to sexual harassment and
violence complaints filed by all employees, including contingent,
temporary, and subcontracted workers.
“Principle 2: The use of non-disclosure agreements and forced
arbitration policies reinforce the silence that perpetuates harassment.
Transparency in reporting sexual harassment and misconduct settlement
costs to investors can help change corporate culture and limit the
potential for significant exposure to financial and reputational risk.
“Principle 3: Companies must prioritize diversity at all levels,
including the board of directors and C-Suite, to take advantage of the
opportunities diversity affords and to be more attuned to the risks
associated with harassment, misconduct and discrimination. Diverse
boards which reflect the racial and gender composition of a company’s
workforce can help to create organizational cultures that prevent sexual
harassment and related risks from materializing.
“Principle 4: Policies and agreements, such as collective bargaining
agreements and responsible contractor policies, that protect workers’
rights provide mechanisms for risk mitigation by addressing power
imbalances that often facilitate abuse, harassment and discrimination
and by providing clear mechanisms for redress when incidents occur.”
The Trustees Principles complement board-approved principles and
policies at each signatory’s organization, respectively: CalPERS
Governance and Sustainability Principles; CalSTRS
Corporate Governance Principles; LACERA
Investment Policy; and LACERS
Trustees, institutional investors and asset owners that share a similar
risk viewpoint surrounding human capital management concepts, including
mitigating risks of sexual harassment and workplace misconduct, are
invited to visit www.TrusteesUnited.com
for more information on submitting their interest to become a signatory
and demonstrate their support for these principles.
About CalPERS: For more than
eight decades, CalPERS
has built retirement and health security for state, school, and public
agency members who invest their lifework in public service. Our pension
fund serves more than 1.9 million members in the CalPERS retirement
system and administers benefits for more than 1.4 million members and
their families in our health program, making us the largest
defined-benefit public pension in the U.S. As of October 31, 2018,
CalPERS’ total fund market value stood at approximately $345.6 billion.
About CalSTRS: The California
State Teachers’ Retirement System, with a portfolio valued at $219.4
billion as of November 30, 2018, is the largest educator-only pension
fund in the world. CalSTRS serves California’s more than 949,000 public
school educators and their families from the state’s 1,700 school
districts, county offices of education and community college districts.
A hybrid retirement system, CalSTRS administers a combined traditional
defined benefit, cash balance and voluntary defined contribution plan.
CalSTRS also provides disability and survivor benefits.
About the Los Angeles City Employees’
Retirement System: LACERS,
established by City Charter in 1937, to provide retirement benefits to
the civilian employees of the City of Los Angeles, representing
three-fifths of the City’s workforce. Currently LACERS provides services
to 24,000 active employees, and provides benefits to nearly 17,500
retirees and their beneficiaries. LACERS administers the benefits
approved by the City (the plan sponsor) which includes pension benefits,
administration of retiree health care premiums, and management of the
pension fund portfolio to offset payment of these obligations. As of
November 27, 2018, the LACERS investment fund was worth approximately
About the Los Angeles County Employees’
Retirement Association: Per the County Employees
Retirement Law of 1937, LACERA
is the administrator of defined retirement plan benefits for the
employees of Los Angeles County and outside Districts. LACERA’s services
begin the moment a new hire becomes a member and continue throughout the
member’s career and retirement. As a forward-thinking association,
LACERA is constantly integrating new technologies into business
procedures and enhancing the scope and quality of services offered to
more than 165,000 members, including close to 62,000 benefit recipients.
As of November 30, 2018, the LACERA investment fund was worth
approximately $52 billion.