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County retirement staff say ESG approach cut fossil-fuel exposure by over 40% while keeping plan well funded

Joint session of the Government Operations and Fiscal Policy Committee and the Transportation and Environment Committee · July 29, 2024
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Summary

Montgomery County retirement-plan staff told a joint council committee that their ESG investment approach has reduced fossil-fuel exposure by more than 40% since 2017, while the pension fund is about 98.6% funded; officials cautioned full divestment carries costs and asked for follow-up climate-risk manager reports.

Eli Martinez, executive director of the Montgomery County Employees Retirement Plans, told a joint session of the Government Operations and Fiscal Policy Committee and the Transportation and Environment Committee that the plans’ ESG approach has substantially reduced fossil-fuel exposure while preserving funding.

“we can solidly say that McCurp is a leader in ESG,” Martinez said, and he summarized the plan’s recent performance and metrics: “our performance has been very strong over the last 10 years, over 8% annualized return, net of fees,” and the ERS is “98.6% funded.” He also said that “since 2017 … our fossil fuel exposure has come down, by over 40%.”

Why it matters: committee members framed the discussion as balancing the trustees’ fiduciary duties to retirees with broader environmental goals. Members repeatedly pressed staff on how climate risk is incorporated into investment decisions, and asked for examples of manager climate-risk reports and the county’s compliance checks.

Martinez and…

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