Illinois Is Going Broke, But The ESG Movement Is Here To ‘Help’

Don’t look now, but the so-called ESG movement is now coming to Chicago.  As if the Windy City and State of Illinois didn’t already have enough problems to deal with, the Wall Street Journal reports that Chicago’s Treasurer, Kurt Simmons, who manages the city’s various pension funds, is now “seeking permission from the city council to use environmental, social and governance (ESG) factors to inform investment decisions.”

As I pointed out in early January, this approach to investing based on social issues rather than return on capital has worked so well in California and New York that it has played a significant role in pushing state and local retirement systems in those states to massive deficit situations.  As the Chicago Tribune recently reported,  Illinois’ “unfunded pension liability is growing faster than taxpayers’ ability to keep up. With about a quarter of general fund revenues going to the pension system, other priorities get crowded out.”

The current situation with unfunded pension liabilities has the Illinois legislature searching for increasingly radical solutions, such as forcing local communities to start sharing in the funding of teacher’ pensions.  Indeed, the state’s predicament is so dire that it has some speculating that Illinois could become the first state to actually declare bankruptcy.

Into this breach steps the ESG movement, with its demands that pension fund managers de-emphasize anticipated rates of return as their main investment priority, and instead begin making investment decisions based on an array of social issues that the ESG movement prefers.  Where Chicago’s public pension funds are concerned, doing this would create an entire new level of risk, as the funds have traditionally been conservatively invested in highly-rated government and corporate bonds.

For those who are unaware, the ESG movement is basically the second generation of what began as the “Divestment” movement.  That movement, pushed for the last decade by radical environmental activists like Bill McKibben, sought to convince cities, states, universities and pension fund managers to overtly divest any investments in fossil fuels stocks or other entities that the activists found to be objectionable.  That movement has suffered a long string of failures over the years, in places like VermontSan FranciscoSeattle, and The University of Colorado, as responsible fund managers chose to continue basing investment decisions on returns on capital rather than engaging in virtue signaling exercises.


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8 thoughts on “Illinois Is Going Broke, But The ESG Movement Is Here To ‘Help’

  1. Reply
    beacons1 - March 3, 2018

    The investment pros at Harvard just have tried this for the 10+ years, This year they will have to write down ANOTHER billion dollars from their 32 Billion endowment fund….Liberals the answer to every problem is “throw more good money after bad”

  2. Reply
    duckandcover - March 4, 2018

    By thy taxes ever growing,
    Illinois, Illinois;
    By thy deficits ever flowing,
    Illinois, Illinois;
    Comes an echo on the breeze,
    All all the money leaves,
    Illinois, Illinois;
    And thy mellow tones are these,

    1. Reply
      Tom Shepherd - March 4, 2018

      Sort of an Ogden Nash / Carl Sandburg soliloquy. Liked it

  3. Reply
    younismourabi - March 4, 2018

    If we have to, we can just print more money. Pension funding deficit solved. Budget deficit solved. UNIVERSAL BASIC INCOME FOR ALL! Venezuela, here we come.

  4. Reply
    Patrick Leary - March 4, 2018

    Don’t forget to turn out the lights!

  5. Reply
    Dogood - March 4, 2018

    The people who should be bailing out IL for its gold plated government pensions, are IL government workers. Of course they could try and increase taxes, but that is no guarantee they’ll get more tax revenue, as producers flee the state for government jurisdictions that treat them better. And people in IL, will find increased taxes passed right thru into the prices they pay for goods and services there.

    If the courts force the government workers to pay for their pensions, that will fix the incentives for government workers to ensure the government is well run, rather than run into the ground for votes now for promises to be paid generous pensions later.

  6. Reply
    Larry - March 4, 2018

    Free haircuts for all!

    1. Reply
      Mark Webb - March 9, 2018

      For life!

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