Don’t Break the Bank, Build a New One: How Investing in Public Banks Can Solve Pensions’ ESG Problem

By Geeta Minocha

Pension funds are significant institutional investors with massive capital. Attractive, prosocial investment opportunities abound. Nevertheless, several roadblocks limit American pension managers from engaging in ESG investing, including ERISA, fiduciary rules, anti-ESG state laws, and institutional inertia. This impasse creates an opportunity for public intervention because the private sector may be failing to meaningfully adjust to meet societal goals. This Note argues that public banking may be an appropriate tool to distribute some pension capital to ESG goals, effectively enabling pensions to outsource their present ESG burden. Though currently a rarity in the United States, public banks can serve as sound investments for pensions while in turn using this invested money for prosocial initiatives.

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