Municipal Pension Fund Investment Policies and SRI
Municipal employee pension funds, of which the largest are those of California, New York State and New York City collectively own a large portion of the shares of American corporations and seek to influence corporate executives through proxy resolutions.
Many of these pension funds have representation from labor unions, which seek to improve the position of workers by using their proxy powers to promote social and environmental issues. A question is the extent to which proxies with a majority of shareholder votes are binding on Boards of Directors. Some Boards have ignored resolutions that have been supported by a majority of votes. A response of institutional investors has been to pass resolutions requiring changes in by-laws that would mandate greater responsiveness to shareholder majorities. Another response has been to seek changes in corporate charters.
Socially responsible investing is frequently done through mutual funds operated by financial intermediaries such as Calvert, Domini, Dreyfus and Neuberger Berman. A high-performing fund in recent years is the Winslow Green Growth Fund. They screen out companies making products that are considered objectionable (cigarettes, for example) or they seek companies that have above-average CSR records in each industry sector.