The SBI engages in Environmental, Social, and Governance (ESG) initiatives to address long-term, material risks and opportunities that are expected to lead to positive portfolio outcomes.
Background
At its February 2020 meeting, the SBI passed a resolution concerning ESG initiatives. Consistent with its fiduciary responsibility, the Board has determined the following measures be taken:
- Continue to actively vote proxies in accordance with SBI proxy guidelines, policies, and precedents as approved by the Board.
- Continue to participate in ESG coalitions and engage with corporations on ESG related issues.
- Prepare and update a Stewardship Report and other ESG informational materials.
- Develop and implement plans for reporting and addressing ESG investment risks; to evaluate options for reducing long-term carbon exposure; and to promote efforts for greater diversity and inclusion on corporate boards and within the investment industry.
Board Resolutions on ESG
SBI Resolution on ESG Initiatives (pdf)
SBI Resolution Concerning Reduction of Investments Associated with Thermal Coal Production (pdf)
Investor Organizations addressing ESG issues
The SBI continues to participate in multiple organizations that address ESG issues including:
- Council of Institutional Investors (CII)
- Ceres Investor Network
- Midwest Investors Diversity Initiative (MIDI)
- United Nations Principles of Responsible Investment (PRI)
- Thirty Percent Coalition
- Climate Action 100+
- Institutional Limited Partners Association (ILPA)
These organizations provide research, engagement opportunities and other resources that enable the SBI to more effectively assess relevant ESG issues. Common issues include, but are not limited to, climate; gender, racial, and ethnic diversity; shareholder rights; corporate governance; and workers’ rights. The SBI continues to assess additional resources.
Manager Due Diligence
SBI investment staff work with external investment managers to address ESG-related risks within the manager's investment portfolios and within the managers' organizations themselves. Most managers have a documented ESG integration approach and DEI policy. In general, the goal is to assess the quality of these approaches. The team tries to establish consistency in information gathering that will help evaluate managers over the long-term and track changes as they are revealed in subsequent meetings. It is important for managers to both evaluate ESG risks and opportunities prior to making an investment; and add value by improving ESG practices once a company is purchased.