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Maryland tries to combat risks through its new climate-focused panel

By Muskan Arora

Following the approval of the board, the $66bn Maryland State Retirement and Pension System aims to combat technology risk, business model risk and portfolio fit through the new climate-focused panel.

Appointed by the Board, the Climate Advisory Panel will consist of at least three outside experts in the analysis of climate change risk who are experienced in climate science or climate economics, as confirmed by spokesperson Katherine Morris.

“I am inspired by the groups that are trying to understand and act on how investing activity is impacted by climate change and how to invest today to benefit from the most profitable segments of the energy transition and climate change mitigation businesses that will rise up to meet these challenges,” told the CIO Andrew Palmer to Markets Group.

“I am under no illusions that we have figured this out which is why we are creating the panel, to add to our insight.  I am convinced that ignoring the risks and opportunities of this multi-decade process is not appropriate for our plan,” added Palmer.

Within climate related investments, the system finds most opportunities in the energy sector, as “we see the infrastructure sector as a growth segment with persistent excess demand for capital for which we expect to earn a premium”.

Evaluating climate-focused opportunities since 2019, the CIO highlighted seeing opportunities in renewable power alongside upgrading the existing infrastructure to be more carbon and energy efficient. 


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Maryland’s portfolio is heavy on private markets investments, with 21% in private equity, 6% in private credit, 9% in real estate and 5% in infrastructure, as of September 30, 2024. On the other hand, 31.7% is allocated to public equities, 17% in rate-sensitive assets and the remaining is split between absolute return and public debt.

The panel is expected to bring together diverse backgrounds that “that may include access to current climate study data and experience in the fields of climate studies or research, investment management or research that integrates climate risks and opportunities into the investment decision-making process, or climate change policy”.

This decision comes after the 2022 session, where the General Assembly enacted into law legislation authorizing the Board to establish an advisory panel of experts in the analysis of climate change risk to provide the most current science and data available.

The advisory panel will collaborate with the Board of Trustees, SRPS Investment Division, and consultants to develop recommendations and initiatives to achieve a long-term sustainable portfolio.

The panel, which will meet twice a year, will advise the board on “setting objectives, strategies and policies for establishing a path to long-term sustainable portfolio consistent with fiduciary duties”.

Maryland aims to reduce greenhouse gas (GHG) emissions by 60% by 2031 and create a net zero path by 2045.

These GHG reduction goals are the “most ambitious” for any US State, as stated by Serena Mcllwain, Maryland’s Secretary of the Environment, in her foreword.

While pension plans in Maryland and California are focused on sustainability initiatives, other states are moving away from such allocations. Last year, the Indiana Public Retirement System terminated BlackRock due to its ESG commitments. A new bill passed in Ohio bans the state from considering ESG factors into decision making. 

In FY 2024, the System returned 6.93% for the year ending June 30, 2024, topping its actuarial rate of return by 13 basis points and beating its policy benchmark by 59 basis points.