AFL-CIO HIT Executives Address Growing Trend Of Domestic Impact Investing In October Benefits Magazine Article
WASHINGTON, Oct. 10, 2017 /PRNewswire-USNewswire/ -- Impact investing by pension plans seeking to achieve social accomplishments as well as competitive returns on their investments reached a record $8.1 trillion last year and is poised to increase as its benefits are more widely recognized by plan fiduciaries and participants, according to Thalia Lankin and Lesyllee White, two executives with the AFL-CIO Housing Investment Trust (HIT).
Ms. Lankin, HIT's Chief Business Development Officer, and Ms. White, HIT's Executive Vice President and Managing Director of Defined Benefit marketing, have written a comprehensive article on domestic impact investing for the October issue of Benefits Magazine, which is published by the International Foundation of Employee Benefit Plans. The article explores how investments that focus on creating jobs, building affordable housing, and supporting local economic development may help Taft-Hartley and public pension plans provide competitive returns while serving participants' other interests.
The article, which is available HERE, notes that according to the Forum for Sustainable and Responsible Investment, the impact investing market nearly doubled from 2012 to the end of 2016 and now accounts for $1 out of every $5 invested by U.S. asset managers. The authors add that this trend is partly due to increasing evidence that seeking social outputs does not necessarily sacrifice financial returns, thus aligning impact investing more directly with a fiduciary's traditional duty.
"Ms. Lankin and Ms. White document the valuable role that pension plan investments are playing by enhancing the quality of life throughout American society, while having the ability to provide competitive returns for their funds," says Steve Coyle, HIT's CEO. "The AFL-CIO Housing Investment Trust has been doing just that for more than 30 years, creating nearly 80,000 jobs with more than $10.7 billion (in current dollars) in investment across nearly 500 union-built multifamily projects nationwide."
The HIT, a fixed-income investment company that manages $6.1 billion in assets for investors that include union and public employee pension plans, is a leader in socially responsible investing.
The article underscores the impact of investing in communities, stating, "when a pension plan makes impact investments to address issues facing its local community, it can realize a competitive return while addressing some of the external factors that can influence the long-term health of the plan."
The authors cite National Electrical Benefit Fund and the National Electrical Annuity Plan, national pension funds sponsored by the International Brotherhood of Electrical Workers, as being at the forefront of investment innovation and gauging investment impact. Between 2012 and 2015, three of their investment managers invested in 306 real estate projects that generated 2.7 million hours of work for union construction workers, including 319,000 hours specifically for electrical workers. And this was only a fraction of the plans' real estate investments.
The article also cites the New York City Retirement Systems (NYCRS) for developing an Economically Targeted Investment (ETI) Program designed to invest capital to address market inefficiencies by providing capital or liquidity to underserved communities and populations. Through its ETI program, NYCRS has contributed to meeting the city's growing affordable housing needs by creating or preserving 99,000 units while generating a market return to keep its pension plans solvent.
These results underscore one of the authors' key conclusions: "Taft-Hartley and public pension plans that focus their impact investing objectives on investing domestically, with particular focus on their local communities, have the potential to improve the long-term health of the pension system."
Michael K. Frisby
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