Frisco updates investment policy to include environmental criteria
Frisco will be taking a deeper look into environmentalism and other social factors as it examines its investments moving forward.
The Frisco Town Council dove into potential changes to the town’s investment strategy during a work session discussion Tuesday, Feb. 23, focusing on whether to add additional criteria to its decision-making matrix when it comes to investing taxpayer dollars.
Frisco has invested $27.6 million in public funds, all of which is broken up into three types of holdings: 78% into local government investment pools, 18% into certificates of deposits (CDs) and 4% into U.S. treasuries and agencies. The town traditionally has followed three criteria for smart investing, which look into safety, liquidity and yield. During the meeting Tuesday, officials discussed adopting a fourth criterion known as an ESG framework, or environmental, social and governance framework.
Essentially, the idea is that by adopting the new criteria into its policies, the town could become a more socially conscious investor by screening potential investments to consider how well the company or entity performs as an environmental steward; its relationships with customers, employees and the communities where it operates; and other nuances like the company’s leadership, executive pay, shareholder rights and more. In other words, the framework would ensure the town isn’t investing in fossil fuel-based companies and instead could look at future investment opportunities that emphasize the long-term viability of environmentally conscious companies.
Frisco Finance Director Bonnie Moinet said the new framework represents a relatively new investment strategy that local governments across the country have begun to explore.
“While investments with a focus on ESG are currently limited, it’s likely opportunities will increase over time, allowing the town to invest in holdings that maintain safety, liquidity and yield as well as ESG standards,” Moinet said. “Incorporating ESG into the town’s investment policy would align with Frisco’s community plan to lead by example of efforts to advance community sustainability and the region’s ability to prepare for and adapt to the impacts of climate change.”
Moinet said the town handles investment decisions in-house. To bring on an outside agency that would include environmental, social and governance services likely would cost the town about $100,000 annually but would provide the town with a new, detailed analysis of its current investments to find any possible connections with companies to which the council would be opposed along with companies with which it would be better aligned.
Officials were on board with the sentiment behind the move and ultimately decided to adopt the framework as a fourth investment criterion. However, council members voiced that they didn’t see the change making a major impact in the short or medium terms and that paying a hefty price for expert analysis wasn’t worth the cost at this time given the town’s current investment portfolio.
“It sounds like everything we’re investing in is somewhere between absolute risk-free and hyper-risk adverse,” council member Andrew Aerenson said. “It’s not like we have a broker whose deciding should we be investing in Shell or Apple or Vail Resorts. … I think we should participate because it’s an important message to send, but I don’t see this impacting anything about where our money is going.”
“We’re not in anything right now that requires this kind of oversight,” council member Dan Fallon added. “We’re in government agencies and things of that nature. I have no problem introducing it as an evaluative criteria and a No. 4 position … but I’d rather let that come to us because we’re not looking to go outside the stable of investments we have right now.”
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