Albany subcommittee reviews options to add ESG screen to city investment policy

The Audit and Fiscal Sustainability Subcommittee of the City of Albany on Oct. 27 received options for adding environmental, social and governance (ESG) criteria to the city's investment policy and asked staff and the city's investment adviser to return with more anonymized data and draft policy language.

Finance Director Bridal Schwartz introduced the item as a follow-up to prior committee discussions and turned the presentation over to Justin Rossello of PFM Asset Management, who outlined four broad screening approaches: a universal absolute rating (allow only medium-or-better ESG risk ratings), a relative rating (require an issuer to rank in the top half of its sub-industry), a universal rating with an exception rule (allow high-rated issuers that fall within a top percentile of their sub-industry), and a combined absolute-and-relative threshold (issuer must be medium-or-better and in the top half of the sub-industry).

Rossello also showed an aggregate breakdown of the adviser's current approved universe of roughly 300 issuers: about 1% severe risk, 5% high risk, 45% medium risk, 47% low risk and 1% negligible…