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ORSC: retirement systems report near-zero holdings tied to Iran and Sudan; small residual positions remain
Summary
Presentations to the Ohio Retirement Study Council showed most retirement systems have reduced Iran- and Sudan-related holdings substantially; several systems reported zero direct holdings while a few reported small remaining exposures and a recent purchase raised questions about timing.
Representatives of multiple Ohio retirement systems told the Ohio Retirement Study Council on March 13 that holdings on the council’s Iran–Sudan scrutinized list have dropped sharply since the program’s start and that, as of the latest annual reports, most systems have zero direct holdings on that list.
Director Karahar (OPERS) told the council that OPERS’s annual report showed no holdings on the scrutinized list for the reporting period ending Sept. 30, 2024. Karahar said the program began in February 2007 and that systems collectively reduced holdings from several hundred million dollars to zero in the most recent report, while noting that trading and timing mean a holding could reappear.
Director Hood said his system has reduced exposure dramatically “from $1,620,000,000 of exposure in 02/2007” to about $15,000,000 of exposure now. Hood said the remaining positions are primarily national oil companies (he described four Asian national oil companies) and an Australian mining company. He explained that national oil companies can appear in passive benchmark-driven holdings because they are large components of international benchmarks.
Director Stenzrugg reported a drop in another system’s holdings from about $117,000,000 a year ago to roughly $34,800,000 in the current report but said those holdings were being reduced consistent with system policy.
John Danesh, appearing for Director Foley, told the council that the Police & Fire system (OP&F) had zero holdings in both 2023 and 2024.
Representative Brennan asked why systems sometimes record purchases of companies that appear on the scrutinized list. Director Stenzrugg and other speakers said acquisitions can occur because trading decisions were made before a system issued a directive to stop purchases, and system policy allows purchase of a scrutinized asset if there is no comparable substitute that meets the fiduciary criteria. Systems use an outside screening vendor to identify potential scrutinized holdings and then engage investment managers to review and, where appropriate, divest or replace those positions.
Council members and system directors emphasized that the program involves ongoing engagement with investment managers and a screening vendor, that the majority of past holdings were in energy and materials sectors, and that systems operate to prevent inadvertent trading into scrutinized assets by placing the screening list into trading systems.
No formal action was taken by the council on these reports; they were received for review.
