The old adage stands firm: actions speak louder than words. The Treasurer’s Office uses a multifaceted approach to advance its sustainable investment strategy. This includes direct engagement with corporate decision-makers, voting by proxy, weighing in on public policymaking, evaluating fund managers and portfolio companies by sustainability factors, working in coalition with other institutional investors, prioritizing diversity and inclusion, and various other measures.
The following table lists notable actions taken by the Treasurer’s Office.
The Treasurer’s Office gains immense value working in partnership with coalitions, corporate governance experts, and other investors. Partnerships help us pursue learning opportunities, advance leading investment practices, and ultimately be better fiduciaries seeking to protect assets and maximize returns. That’s why we are active members of several major investor networks, including those featured below, which are made up of leading asset management firms, public pension funds, labor funds, foundations, endowments, family offices, and other state treasurers.
DIVERSITY & INCLUSION
Creating More Opportunities for Minorities, Women, Veterans, and Disabled-Owned (“MWVD”) Businesses – Inclusion is a key pillar of the Treasurer’s approach to investing. Research demonstrates that MWVD-owned companies are often well-situated to ascertain capital inefficiencies in the market, and as such, many are primed to outperform their peers. Treasurer Frerichs and his team have transformed the culture, policies, and operations of the Treasury to enhance opportunities available to MWVD individuals and business partners. Since Treasurer Frerichs came into office:
The Office of the Illinois Treasurer has increased utilization of MWVD broker/dealers from 1% to 77%. Put another way, total assets brokered by MWVD firms increased from $603 million in FY 2014 to $39 billion in FY 2021. That represents a 64-fold increase.
The Office of the Illinois Treasurer has increased assets managed by MWVD firms from $18 million in December 2014 to $3.3 billion as of June 2021. That represents a 183-fold increase.
Click here for more information on the Illinois Treasurer’s focus on equity, diversity and inclusion
Midwest Investors Diversity Initiative – The Illinois Treasurer leads the Midwest Investors Diversity Initiative (MIDI), a 17-member coalition comprised of regional institutional investors with over $1 trillion in assets under management. MIDI engages companies in the Midwest facing board diversity shortfalls, working collaboratively to understand company policies and practices and make targeted recommendations to institutionalize best practices and improve board diversity. MIDI works with companies to adopt a diverse search policy known as the “Rooney Rule,” which has its origins in the National Football League. The Rooney Rule provides that, for every open board seat, women and racial minority candidates be included in the initial search pool of candidates.
Since launching in 2016, MIDI has conducted 75 company engagements, and 51 companies have committed to adopt the Rooney Rule. In addition, 95 women and persons of color have gained corporate board seats following engagement.
Thirty Percent Coalition – Since 2018, the Illinois Treasurer has been actively involved on the Board of Directors of the Thirty Percent Coalition, which is comprised of over 90 members with over $7 trillion in assets under management (AUM). This coalition is committed to the goal of advancing women, including women of color, on boards of public companies.
As a leader of the Thirty Percent Coalition, the Illinois Treasurer and fellow investors have successfully engaged nearly 400 companies that have now appointed women to their boards.
Russell 3000 Disclosure on Racial/Ethnic Board Diversity – The Illinois Treasurer is leading a campaign, launched in October 2020, asking all companies in the Russell 3000 to disclose the racial, ethnic and gender composition of their Board of Directors in their proxy statements. We believe the business case for board diversity warrants the request for full disclosure. Our office, joined by fellow institutional investors, is asking leading American companies to self-correct this omission if they do not do so already. Supporters of this effort will be examining policies to vote against nominating committees with no reported racial/ethnic diversity in their proxy statements and expanding more direct shareholder engagement.
ANNUAL REPORTS
The Illinois Treasurer publishes an annual sustainable investment report every year. These reports showcase in detail the Illinois Treasurer’s sustainable investing priorities and activities during the relevant calendar year.
