Socially Responsible ESG Investing & Fiduciary2019-08-23T00:55:37+00:00

Sustainable Investing ESG is an evolution from Socially Responsible Investing (SRI) 

Environmental Issues 

  • Climate change and carbon emissions
  • Air and water pollution
  • Biodiversity
  • Deforestation
  • Energy efficiency
  • Waste management
  • Water scarcity

Social Issues 

  • Customer satisfaction
  • Data protection and privacy
  • Gender and diversity
  • Employee engagement
  • Community relations
  • Human right
  • Labor standards 

Governance Issues 

  • Fiduciary Duty to Investors
  • Board composition
  • Audit committee structure
  • Bribery and corruption
  • Executive compensation
  • Lobbying
  • Political contributions
  • Whistleblower schemes
  • Transparency Environmental Issues​​

SRI vs ESG

  • CFA Institute
  • Including ESG factors into investment analysis is consistent with fiduciary duty
  • Fiduciary duties exist to ensure that anyone who manages other people’s money act in the best interests of beneficiaries. When you invest in a fund such as a mutual fund, the fund manager has the fiduciary duty to invest in your best interests.  
  • Until recently, incorporating ESG factors into the investment process was widely assumed to violate fiduciary duty. The argument was built on the assumption that incorporating ESG factors requires a trade-off in investment performance or financial returns. This is often used as an excuse for not considering ESG factors. But it turns out, this isn’t true (PDF).
  • CFA Institute helps to put this debate to rest in its policy statement.
  • Better ESG factoring leads to better investment decisions
  • The CFA Institute’s new statement emphasizes the need for charterholders to factor in all material information, including material ESG factors, in their financial analysis — because doing so will improve their investment decisions. Material factors are those that a reasonable person would consider important in making investment decisions.

Chris Tobe, CFA  is a global leader in  Governance particularly Transparency and fighting Corruption in U.S. state & local government pension plans and investments in general including state regulated insurance products by requiring Fiduciary Standards.  

His goals are:

  • More responsible sustainable investments in state pensions with transparency and fiduciary standards
  • Better investments in our university’s money primarily in their foundations
  • Pushing employers to provide ESG options in 401(k) plans
  • As a Fiduciary Helping individuals fulfill their investment goals while acting on their values in ESG investing 

He serves on the London based Transparency Task force and he is the founding chair of the Kentucky chapter of Represent US. Chris fights for pensioners & investors including taxpayers who are victims of high fee and high-risk investments. He has been one the leading opponents to high fee high risk hedge funds and private equity in public pensions many in secret no-bid contracts in the Cayman Islands.  

Chris has written 4 books and dozens of articles on transparency & corruption in investments. Kentucky Fried Pensions 2018 targeted to Kentucky and Public Pensions Secret Investments targeted to Trustees, Staff, regulators. His 1st book “Kentucky Fried Pensions” was cited by Pulitzer prize winner Gretchen Morgenson of the NY Times and Matt Taibbi of Rolling Stone. He has been quoted and works regularly on public pension corruption stories with Neil Weinberg of Bloomberg, David Sirota of YoungTurks, Travis Waldren of the Huffington Post, and Gary Rivlin formerly of NY Times now with the Intercept.  2 articles in Transparency Times are based on the research from these 4 public pensions books. His other book “Consultants Guide to Stable Value” on fixed income 401(k) insurance based investments in the U.S. also has produced an article for Transparency Times.  He was interviewed on hedge fund corruption for the October 2018 PBS Frontline piece on pensions. 

He does legal expert work in the areas of investment corruption and excess fees in both US Public & Corporate pension plans.   He also serves as Chief Investment Officer for a minority woman owned Pension consulting firm out of New Orleans the Hackett-Group where he has provided project consulting to a number of public pensions.

Since there are few Kentucky ESG stories to tell, he wants to learn more about yours in anyway that you are comfortable sharing to groups to help spread the word around our state.  

So how do we change in Kentucky​?

  • Very little awareness which is regional & cultural
  • Better investments in our state money primarily state pensions
  • Better investments in our universities money primarily in their foundations
  • Asking our employers for ESG options in our 401(k) plans
  • ESG related projects
  • Investing ourselves in ESG investments
  • Pensions- Some G not much else
  • As KRS trustee staff & board rejected my application to attend CERES a group for sustainability that many public pensions are involved in and CII one that just supports sustainability
  • Current political environment Frankfort is toxic to Environmental and Social concerns.   TRS invests in Charter Schools   Firearms, private prisons
  • Much of my emphasis has been on Governance ie transparency especially with fees and offshore investments, this even has been fought back hard by Wall St. Lobbyists in Frankfort.  
  • Universities other
  • KY largest endowment Berea incorporates ESG principles https://www.berea.edu/vpf/wp-content/uploads/sites/68/2016/06/Berea-College-Investment-Policy-10-17-2015-without-signatures.pdf
  • Most other Universities ignoring ESG to my knowledge
  • UL, UK, & Berea heavy in Private Equity Hedge funds I feel have Governance Issues

Governance – Transparency, Ethics, Fiduciary Standards Articles​​

  • Transparency  Times – CFA Standards  September 2016   https://issuu.com/andyagathangelou/docs/the_transparency_times_edition__5_s
  • http://www.marketwatch.com/story/why-guided-architecture-at-banks-is-so-misguided-2014-11-21
  • http://www.marketwatch.com/story/in-banks-we-used-to-trust-2014-08-25
  • http://www.marketwatch.com/story/future-of-finance-project-is-a-good-start-2013-03-28
  • http://www.marketwatch.com/story/sec-whistleblower-fund-3000-tips-little-payout-2013-02-06
  • Investment Ethics: It’s Good Business by Chris Tobe, CFA and J. Todd Taylor CFA, CPA June 1998
  • originally published Business First of Louisville, republished AIMR web-site
    Mutual Fund Directors Governance Changes In U.S. For Independent Directors Could Improve Performance And Lower Costs   Corporate Governance – An International Review, January, 2000  Used in World Bank Training at 
    http://info.worldbank.org/etools/docs/library/156006/pillars/pdfs/bib/tobe.pdf  http://papers.ssrn.com/sol3/papers.cfm?abstract_id=192531