Monday, March 31, 2014

Policy: deploying our $3 trillion in public pensions for a better world

The 100 largest state and local pensions systems combined control more than $3 trillion. They -- I mean, we citizens -- hold $1.1 trillion in corporate stock.

This is a mega-opportunity to grasp a powerful tool to reshape the world.

The data is from the US Census quarterly survey of pension systems. The biggest 100 dominate the field with almost 90% of all the capital in public pension funds. What could we do with this money?

Consider the world's biggest problems: climate change, savage and rising inequality and a basic lack of investment in the poorer half of the globe. Imagine if every publicly-traded corporation decided to raise the wages they pay, implement aggressive supplier diversity programs and become carbon-negative (generate less pollution than if they didn't exist). And imagine they stopped funding political movements that slow down progress.

That can happen. We own these companies. We elect their boards of directors. We vote on corporate policy every year through shareholder resolutions. We just don't exercise our responsibility to shape the direction of publicly-traded corporations. Instead, we let Wall Street money managers who are focused on quarterly results and not on long-term sustainability vote for us.

Every state legislature and county board and city council could direct their pension funds to start using our enormous sums of capital as a force for a more sustainable, prosperous world. All we have to do is start electing board members and supporting corporate resolutions to do the right thing: pay higher wages, create less pollution and buy from diverse suppliers.

I suspect that very few of these 100 pension funds even have a public policy on how they cast their votes in corporate elections. I suspect that most of them just allow the money managers to decide how to vote -- which is basically voting for the status quo. And the status quo is not working very well.

There's a huge opportunity to shape policy to harness the power of three trillion dollars. And it's a state and local campaign, so it is winnable. (It's not like we need to somehow convince John Boehner to support something -- we need our blue cities, counties and state who are already predisposed to support the effort to take action).

This is a battleground for climate change. It should be. How do we get the fossil fuel companies to transition into clean energy companies? Well, we own them! We just direct them -- through our trillion+ of corporate stock -- to transition to energy development that won't cook the planet.

We're basically the landlords of corporate America, and we just let the Wall Street money manager tenants run the place.

Every publicly-traded corporation could take the view that long-term prosperity relies on lots of customers with lots of disposable income so as a policy, they pay wages significantly above what the market will bear. They could take the view that long-term prosperity relies on a planet that isn't cooked, so they will only buy renewable energy and only do business with suppliers that do the same. They could take the view that long-term prosperity requires an educated workforce so they will stop seeking special tax breaks from competing governments that have the affect of draining money from schools.

Wresting control over our three trillion in assets from the short-term-only money managers and instead investing in long-term prosperity for a better world through more enlightened corporate policies could be one of the most significant, high-impact, bang-for-your-buck political/issue campaigns in state and local governments.

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