May 31st was the deadline to apply for an effective July 1 retirement or T-DROP participation date, and as expected we received a lot – more than 1,300 retirement and T-DROP applications from members. Just in the month of May, your ATRS staff:
- Received 5,440 phone calls from members
- Met in-person with 336 members at our Little Rock office
- Responded to 1,825 emails from members
I am very proud of our ATRS staff and all that they do to serve you, our members. We are already discussing ways we can improve our service level to make next year’s retirement season even more seamless for our members and for our staff. If you have a suggestion or idea for how we can better serve you, please email me at MarkW@artrs.gov. And if you or someone you know had a bad experience of any kind, please let me know about that as well.
Report on the ESG Oversight Committee
Just as we are closing out retirement season for this year, we also recently closed the book on an investment matter that came up between the Legislature and the state’s retirement systems last year. Because we have now resolved the issue, I wanted to give you a final update.
You may remember the ESG investment discussions that took place during last year’s legislative session. ESG is an acronym for “Environmental, Social, Governance” and refers to how some corporations and investors make decisions that are not based on profit alone, but also on political, societal, ideological, or moral principles. Arkansas legislators have pushed back on ESG investing, because they believe that investment decisions should be based solely on a financial basis. In other words, an investment should be chosen based on how much profit it will return, and not whether it meets certain political goals.
The Legislature approved several bills last year related to ESG, one of which was House Bill 1307. It proposed setting up an ESG Oversight Committee tasked with identifying financial service providers that discriminate against the energy, fossil fuel, firearm, or ammunition industries. It then directed the state’s retirement systems not to invest with the providers that discriminate against these industries.
The Legislature passed HB 1307, but not without opposition. I know that some of you were concerned about how this legislation would impact ATRS and the other retirement systems. From the time I joined ATRS last year, I have been cautiously optimistic but focused on securing the best result for our System. We have now completed the process set up by HB 1307, and I am happy to report to you that ATRS will not suffer any financial harm or loss as a result of it.
The ESG Oversight Committee set up by HB 1307 made its decisions and identified a number of financial service providers that ATRS and the state’s other retirement systems can no longer do business with. You can find that list on the State Treasurer's website. ATRS has a few small investments with only three of these providers, and the investments are all publicly-traded securities that can easily be sold.
I attended all but one of the meetings of the ESG Oversight Committee. I was impressed with the diligence and the nuanced understanding that the Committee members brought to their task. They recognized that in some cases, these financial service providers are only doing what their clients are asking for, in that some clients want an investment portfolio focused on ESG. The Committee carved these providers out of their final list, and in doing so they protected some much larger ATRS investments.
By the end of this calendar year, we will have sold all of the investments we hold from the providers on the list. I expect they will represent less than 0.08% of our System’s assets. We should see a net gain from the sale, and we can easily transfer those funds to other investments with similar or better returns.
The ESG Oversight Committee has now finished meeting and cannot meet again unless the Governor calls them back. We will closely monitor next year’s legislative session, and if we see any bills that may significantly impact the System, we will alert you. But as for HB 1307, you can rest easy that it has not and will not harm our System.
I want to express my appreciation to the legislators who sponsored HB 1307 for their hard work and cooperation. When the bill was first filed, ATRS staff and others approached them with concerns. These legislators negotiated in good faith and made several amendments to the bill that greatly improved it. Because they listened and worked with ATRS staff to improve the bill, ATRS members remain secure.
And one last point on this issue – even without the legislation, I know that your ATRS Board of Trustees is fully committed to making every investment decision on the basis of what is in your best interests financially. They do not let politics or ideology affect their decision-making.
As always, if you ever have a question about your retirement options or need information or advice, please reach out to our counselors by calling (501) 682-1517 or emailing info@artrs.gov. And if you have any concerns or questions about the System as a whole, please contact me at the email address or phone numbers below.
Mark White
Executive Director, ATRS
MarkW@artrs.gov
Office: (501) 621-8853
Cell: (501) 541-2057