Chicago Treasurer Summers, Ald. Arena Introduce Groundbreaking Environmental, Social and Governance Investing Legislation

Legislation to fully integrate environmental, social, and governance (ESG) considerations into Chicago’s investment decision-making process will solidify Chicago’s place as a leader on responsible investment in the United States and across the globe

CHICAGO — Chicago City Treasurer Kurt Summers and Ald. John Arena (45) will introduce groundbreaking legislation in the Chicago City Council on Wednesday that would fully integrate environmental, social, and governance (ESG) considerations into the City Treasurer’s Office’s (CTO) investment decision-making process. Through ESG investing, the CTO will generate better risk-adjusted returns with its $7 billion investment portfolio, and drive investment dollars to make a positive impact on some of the most fundamental challenges facing Chicagoans, from climate change to worker rights to gender and racial equity.

Through this innovative legislation, Chicago will take clear, defined steps toward fully integrating ESG factors into the investment decisions within its operating portfolio, including (but not limited to) the following actions and commitments:

  • 100% Integration: Ensure that 100% of investment decisions on corporate securities are analyzed through ESG factors, making Chicago the largest city in the country to take this step with its operating portfolio.
  • Comprehensive Approach: Seek to maintain a minimum ESG portfolio rating of investment grade or higher, making Chicago the first city in the world to adopt a minimum ESG portfolio rating for holdings in corporate securities.
  • Proactive, Responsible Investing: Pursue opportunities for sustainable investments, including purchasing securities from market leaders in disclosure and corporate board diversity, securities that fund community development projects, and other securities with strongly positive effects on our communities.
  • Commitment to UNPRI: Become a signatory to the United Nations-supported Principles for Responsible Investment, making Chicago the largest city in the world to join the international initiative encouraging responsible investment across sectors.
  • Commitment to Carbon-Neutrality: By 2020, achieve a carbon-neutral portfolio from an investment perspective, which may include seeking to offset existing investments in the top 200 publicly-owned coal, oil, and gas reserve owners (ranked by the carbon emissions embedded in their reserves) with socially responsible investments.

“We see ESG investing as a win-win proposition because it empowers us to be financially prudent and impact driven,” Treasurer Summers said. “We are excited to be at the forefront of this work, creating a new standard of responsible investment not only for cities but also for other large institutions, from companies to foundations to university endowments. I want to thank Alderman Arena for his leadership in making sure that responsible investment is at the forefront of the public debate.”

Alderman Arena added: “Over the last year, we’ve seen a groundswell of support for this type of investing all across Chicago because our investment dollars should reflect the priorities and challenges of our city from environmental, social, and governance lenses. It’s exciting that we’re making these legislative changes to enshrine Chicago’s place as a leader on sustainable social change, not only today but for years to come, so that this initiative outlives each of our respective tenures in office. I want to thank Treasurer Summers for his work on this effort, and I call on my colleagues in City Council to swiftly pass this legislation.”

This important legislation is a result of a thorough consultative process with industry experts and other relevant stakeholders, led by Treasurer Summers and Alderman Arena. Moving forward, the City Treasurer’s Office will prioritize transparent reporting of its progress on implementing ESG investing to the general public, share best practices with some of the world’s largest public- and private-sector investors, and refine its approach to ensure that Chicago takes advantage of the best available data.