In another sign that PE firms will face continued encouragement to diversify their ranks, the Maryland State Retirement and Pension System plans to hire its first senior manager of environmental, social and governance, or ESG, and of corporate responsibility.
“Maryland is a blue state, and stakeholders care deeply about these topics,” Chief Investment Officer Andrew Palmer told Private Equity Career News in an interview this week.
After joining the pension in 2015, Palmer supervised creation of both an ESG committee and a diversity, equity & inclusion (DE&I) committee, the latter chaired by Dana Johns, senior portfolio manager on the five-person private equity team. Palmer also oversees a diversity-embracing emerging manager program that has grown to 6 percent of the public portfolio and includes some private assets.
“But we needed to take it further,” Palmer said, because “there’s nobody that’s really [dedicated to] thinking about these things holistically.” He said that the new hire would provide training, marshal resources, see programs through from start to finish, and make sure ESG considerations extend across asset classes.
The Pension: Maryland State Retirement and Pension System as of last June managed a portfolio of $67.6 billion, including an $11.6 billion private equity allocation. Its 42-person investment staff has nearly doubled in size since Palmer joined seven years ago. Johns observed that since she joined in 2011 the pension has created many more career paths for employees and provides more training. She called the atmosphere creative, collaborative and professional.
Impact on PE: Palmer would like to see PE firms do more to diversity their payrolls: “You know, many of these firms are populated by people who went through the same school together…worked at a large bank with the same training program, and then set up a business.” He added: “How do these [firms] work to make sure that they are not suffering from group-think?…Diversity of identity is one of the ways they can improve their diversity of thought and hopefully their investment outcomes.”
The Big Picture: Public pensions and other funds managed by state and local governments incorporated ESG considerations for $3.4 trillion in assets as of the start of 2020, according to the US SIF Foundation. Public pensions that have hired full-time professionals dedicated to ESG include Teacher Retirement System of Texas and New York Common Retirement Fund.
The Role: In this position you’ll be responsible for executing all facets of the investment division’s governance program, including ESG, DE&I, and proxy voting. Among your tasks, you’ll make sure investment officers working on the PE program and other asset classes consider ESG issues when recommending new investments and evaluating current ones. One of your first priorities, said Palmer, will be to make sure the pension fund meets new obligations to consider climate change risk when setting investment policy.
Qualifications: Along with having earned a Bachelor’s degree you should have relevant experience in such areas as ESG or corporate governance. Also desirable: experience working at a pension, endowment, foundation or other institutional investor.
Compensation: The salary range allocated for the position is $125,316 to $237,787. Where you end up is based on experience, qualifications. Noteworthy perk: permanent state employees get to use the Baltimore light rail, subway and bus services for free.
Location: You should anticipate working in the pension fund’s Baltimore office at least Tuesday, Wednesday and Thursday each week.