2 U.S. public pension funds take different tacks on diversity

R. Stanley Rupnik, CIO and interim executive director of the pension fund, stressed to trustees that “unlike what happens at other funds, Jose is out there every day finding (emerging) managers.”

In his presentation, Mr. Gonzalez said, “Engaging with the MBWE community through network partners helps to build a pipeline of diverse managers and firms,” and identified 100 Women in Finance, the Association of Asian American Investment Managers and the Women’s Association of Venture & Equity as entities with which TRS works for manager sourcing.

The investment staff, led by Mr. Rupnik and Greg Turk, director of investments, have begun to incorporate analysis of diversity and inclusion in evaluating managers in the retirement system’s private equity, real estate/real assets and diversifying strategies (hedge funds and alternative risk premium funds), according to discussion during the meeting.

Investment officers did not provide details about the new diversity and inclusion investment analysis during the trustee meeting and investment staff declined to comment beyond the meeting.

As the emerging manager presentation was ending, Andrew Hirshman, chairman of the investment committee, said diversity and inclusion concerns “aren’t social issues. They are investment issues.”

The investment advisory council of the Minnesota State Board of Investment also dug into diversity and inclusion issues at the request of council member Susanna Gibbons during an Aug. 17 meeting conducted remotely.

In an Aug. 5 letter to fellow members, Ms. Gibbons urged the board to act in accordance with a resolution passed by the board in February directing the staff and board “to promote efforts for greater diversity and inclusion on corporate boards and within the investment industry.”

Ms. Gibbons said in her letter that “the MSBI has done an excellent job so far of bringing these issues to light as part of its broader ESG agenda and I applaud staff for their ongoing efforts. However, the murder of George Floyd and subsequent demonstrations are forcing all of us to confront the persistent and insidious racism that remains firmly embedded in our economic system.”

Ms. Gibbons’ suggestions for actions included developing diversity goals and better reporting from the MSBI’s investment managers; developing proxy guidelines on board diversity with achievable goals in mind; and reviewing the work of the Intentional Endowments Network, a group of 160 mission-driven institutional investors that is collaborating to meet investment objectives “through investment actions that create a thriving, sustainable economy,” according to its website.

In a memo to the full board, the investment advisory council said its members “generally agree that the MSBI should continue to expand its evaluation of managers and portfolio holdings with respect to diversity and inclusion.”