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Albany committee reviews ESG screening options; public urges divestment from Caterpillar and Lockheed Martin
Summary
PFM presented ESG screening approaches (industry exclusions, revenue-based filters, Sustainalytics ESG risk scores) and estimated impacts on the city's approved buy list; multiple public commenters urged divestment and criticized recent changes at Morningstar/Sustainalytics; committee directed staff to return with additional information.
PFM Asset Management presented options for incorporating environmental, social and governance (ESG) criteria into the City of Albany's investment strategy, describing a menu of approaches that includes industry or sub-industry exclusions, revenue-based screens, third-party ESG risk ratings and targeted environmental-risk filters.
Justin Nocello (PFM) told the Audit and Fiscal Sustainability standing committee that the firm's approved buy list for corporate holdings is about 300 names and that excluding whole industries such as oil and gas or aerospace and defense would eliminate a relatively small share of that buy universe. He said a sample ESG risk threshold (Sustainalytics score under 30) would leave roughly 78% of approved issuers available to the city. PFM estimated the additional fee to implement an ESG screening overlay at about 1'to'2 basis points depending on complexity (PFM's example: 1 basis point on a $30 million portfolio equals about $3,000 per year).
Why it matters: any change to the city's investment policy that narrows the eligible…
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