The Louisiana
Legislature provides guidance to all state public retirement
systems with regard to investments in companies which operate
in, or have relationships with, countries designated by
the United States government as Prohibited Nations.
La. R.S. 11:312 (Act 9 of the 2005 Regular Session of
the Louisiana Legislature) requires all public retirement
systems in Louisiana to report to the House Committee on
Retirement and the Senate Committee on Retirement all holdings
in companies conducting business in or with Iran, Libya,
North Korea, Sudan, or Syria.
Under the
provisions of the Act, “The report shall include the name of
each such company, the asset allocation class and sector to
which it belongs pursuant to the board's asset allocation policy,
and the amount of system funds invested therein.”
LASERS Statement
of Purpose with regard to Prohibited Nations is as follows:
-
Support the Global War on Terrorism
-
Avoid penalizing companies whose activities
abroad are supported by the US government
-
Avoid penalizing companies whose activities
abroad do not further terrorism
-
Avoid unnecessarily harming US companies
and jobs
-
Identify credible sources of information
regarding companies who are actually aiding and abetting
terrorists
-
Develop a methodical strategy for investments
Divestiture of assets is an issue
of concern at many public pension funds, but if LASERS divests
its assets from a company, it is no longer a shareholder and
loses the ability to influence the company to change its business
practices. Shareholder activism pressures companies to make
changes in management or policy. This collective influence on
the companies can be applied on a case-by-case basis.
LASERS works with the Council of Institutional Investors, which
has taken the lead in asking the U.S. government
for increased
disclosure and government guidance on which companies are acting
in a manner contrary to US foreign policy goals by supporting
terrorism.
As the list
of terrorist supporting countries changes, LASERS could suffer
losses due to the ongoing process of divesting and reinvesting.
The legislature has charged LASERS with earning a minimum 8.25
percent return on its investments. Requiring LASERS to
make national security decisions and mechanically restructure
its investments would, over time, hinder returns.
Louisiana
statutes governing the management of investments by the state
retirement systems outline the fiduciary responsibilities of
all LASERS Trustees to the system’s members. Under the
provisions of
La. R.S. 11:264 -
264.8, each fiduciary must “discharge his duties with respect
to the system in the exclusive interest of the members and beneficiaries.”
The LASERS Board of Trustees has taken the position that its
members are obligated to invest funds solely in the financial
interest of plan members and not to consider specific social
or economically targeted goals unless it complies with the fiduciary
duties outlined in the statutes.
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