The $70B Maryland State Retirement and Pension System has adopted Responsible Workforce Management Principles to guide investment decisions for its $15B private equity portfolio.
The framework, which was approved during a recent board of trustees meeting, establishes expectations for private equity managers to incorporate workforce considerations – including health and safety protections, fair compensation, benefits, and employee retention – into their operational strategies.
“As stewards of Maryland’s public retirement assets, we must ensure that our investment approach reflects both fiscal responsibility and values-based leadership,” said State treasurer Dereck E. Davis, in a press release. “These principles strike the right balance, reinforcing the importance of worker dignity while enhancing long-term portfolio strength.”
The new guidelines will allow the plan to evaluate private equity managers’ alignment with SRPS’ values, including where transparency and oversight mechanisms differ from those in public markets.
“Prioritizing fair wages, safe workplaces, and employee development gives businesses a competitive advantage that benefits their bottom line and delivers strong returns for shareholders,” said comptroller Brooke E. Lierman, in the release. “It is important that our pension system is investing with companies that support the well-being of employees in ways that deliver long-term value for our dedicated public servants who are relying on a strong performance to fund their retirements.”
Maryland’s new principles will be implemented in collaboration with the System’s investment staff and consultants and will inform future manager selection, engagement, and reporting practices.
“The Board’s action affirms that responsible investment is smart investment,” said Martin Noven, the SRPS’ executive director, in the release. “By encouraging our private equity partners to uphold strong workforce practices, we support both long-term value creation and our fiduciary duty to members.”
Maryland joins a small but growing group of public pension systems, including New York State and the California Public Employees’ Retirement System who have taken similar steps on workforce accountability in private markets.
CalPERS’ Board of Administration approved the adoption of labor principles in a dedicated section of its Governance and Sustainability Principles, launching the framework last year. June 2024 meeting materials noted the pension fund shared the principles with external private equity managers and requested receipt, as well as confirmation of broad alignment with the principles outlined.
Last year also saw the New York State Common Retirement Fund implement responsible workforce management best practices that “prioritize the protection of health, safety, fair compensation, reasonable benefits and rights of companies’ workers,” noted a press release. The policy applies to private equity asset class investments, other than funds of funds, secondary funds, and funds that don’t have a strategy of independently making equity investments.
