Maryland State Retirement Seeks ESG Head

By David G. Barry

The investment division of the Maryland State Retirement and Pension System (MSRP) is for the first time seeking a person to lead its environmental, social and governance (ESG) efforts.

The $69.3 billion system began advertising this week for a senior manager of ESG and corporate responsibility. The position, according to the job description, will be responsible for all aspects of the governance program for the investment division and the system, and will monitor, evaluate and quantify the risk and effects of ESG and diversity on the portfolio and the investment division. This role also will be responsible for the oversight and management of the divestment program, engagement process, proxy voting, proxy monitoring and other matters.

The move comes as institutional investors – especially public pension funds - are looking harder at the ESG policies of their external investment managers. A few have had individuals focused on this area for a few years, such as the California Public Employees’ Retirement Association, California State Teachers’ Retirement System, Oregon State Treasury and the New York State Common Retirement Fund. The Washington State Investment Board created and hired a sustainability officer in 2019, said Chris Phillips, WSIB’s director, institutional relations and public affairs.

The individual, Sherrie Trecker, helps to “integrate ESG factors and metrics as part of the investment process,” Phillips said. In her role, Trecker partners with the entire investment division and contributes analysis to the investment committee decision-making. She is responsible for “leading sustainability-related advocacy efforts,” Phillips added.

But many public pension funds are having their teams collectively focus on the issue. An early signatory of the United Nations Principles of Responsible Investing in 2008, MSRPS says it has long been active as a responsible investor in addressing ESG risks. At present, the system is investing through an ESG lens in most areas except for government bond portfolios, hedge funds and relatively short investment horizons, index funds and emerging managers.

Andrew Palmer, who has been MSRPS’ chief investment officer since 2015, formed an ESG Risk Committee in 2017 to provide thought leadership, education and reporting around ESG issues. The committee does not focus on diversity as that falls under the system’s diversity committee. It is comprised of Palmer as well as the system’s senior compliance officer and five investment professionals.  The committee most recently met in February.

The system’s board of trustees approved Palmer’s recommendation last year to create the new ESG position. MSRPS is seeking a candidate with experience as an institutional investor; experience in the investment decision-making process; and experience with ESG integration and knowledge of key ESG issues The selected person will report to the deputy chief investment officer, who is currently Robert Burd. The salary range is $125,316-$237,787 with a midpoint of $172,310.