PERA’s investment philosophy: Financial returns first or ESG by another name?

By Cory Gaines | Commentary, Colorado Accountability Project

PERA and ESG

People often want their investing to reflect their values. There are some whose values are such that the supreme consideration is how quickly their nest egg grows. There are some who might be concerned with how quickly their nest egg grows, but along with that concern, they want to know that they’re not investing in things they find morally repugnant — no money to cigarette companies, arms manufacturers, or even sometimes companies that (in their view) harm the environment.

Fair enough. We all have our values and it’s a free country.

In recognition of the latter consideration, there has been a movement toward consideration of a company’s ESG (environmental, social, and governance) rating when it comes to questions of investing.

I will leave it to you to study up on the topic in the Wikipedia explainer on ESG I link to first below. For the remainder of this post, I will assume at least a glancing familiarity with it when I discuss PERA and ESG.

A Public Employees Retirement Association (PERA) involvement in values-related investing is problematic in a way that private investing in privately-controlled funds is not.

Investment with PERA is not voluntary and for as many retirees are in it, there are a whole lot of values to consider. As such, it’s not fair for PERA’s managers to inject their values into values-based investment decisions.

In order to see how the folks who do the investing at PERA thread this needle, I went and looked at their 2025 Investment Stewardship Report.**

There’s a whole lot in this report that I don’t have space to cover, even as it relates to ESG. What I will shoot for, therefore, is a quick overview pointing you to various pages to read through so you can better inform yourself. This way, if you see things you don’t like, you can know there perspective prior to speaking up to PERA.

As a quick overview, if I had to summarize PERA’s stated philosophy, I think it’s best shown with the following quote from the top of page 17:

“Regardless of how factors we consider can be labeled, we prioritize financial value, rather than personal values, in our investment and proxy voting decisions.”

Let’s pause quickly so you can fully understand before moving on. Remember that PERA, as an investor, is enabled to do two things. One, they can decide where to put their members’ savings, and two, by purchasing some part of a company they are entitled to vote on that company’s policy on your behalf. Both actions have the potential to be values-based.

I think it’s also helpful to know how PERA understands the concept of ESG, how they define it. That is shown as screenshots 1a and 1b. Definitions matter and this is how PERA defines and frames ESG.

They continue in their report to elaborate on the topic of ESG and how they approach it. I will leave that discussion to them and your reading, but I do think that some examples are helpful in fleshing out PERA’s stated approach.

Screenshot 2 is from their table where they discuss their policy on divestment, ridding their investments of certain companies or general categories.

Screenshot 3 is a summary of the shareholder proposals that PERA voted their support for by topic.

Lastly, screenshots 4a-4c show examples of how PERA used its proxy voting in three separate instances, along with their rationale.

If you’re anything like me, if you have read enough documents like these and have no shortage of cynicism, it’s easy to see what PERA says as being nice language to hide an agenda. I.e. it’s fancy words to mollify you while they go about injecting their values into investing your money. Labels for things are pretty easily stretched and distorted; anything is anything if you’re clever enough at wordsmithing.

This is particularly the case when you continue down to around p. 32 and see the following aside in one of their text boxes:

“ESG performance reports do not inform our portfolio management decisions; rather, they give us a different perspective on existing investments.”

This is backed up by an example in screenshot 5.

On the other hand, it’s fair to point out that PERA does offer options for those that want to fully embrace values-investing and/or complete self-control of their own money. This is outlined in screenshot 6.

More than anything else, what I hope you take from this is a quick and dirty understanding of how PERA sees ESG and how they say it guides their decisions. This is important for what I will wrap this post up with.

If you don’t like the way your money is invested but do not want to take full control of your own investment, or if you have other concerns about what PERA is doing (see “Related” below), I urge you to get involved.

Speak up at a board meeting (see the third link below), or contact PERA through their general contact page linked fourth below and ask about ways to send in written comment.

It’s your money after all. No one else will speak on your behalf.

**If you are in PERA and want to see more details on how their governance and investment work, this report is a great resource to start with. In keeping with the above, know what PERA’s thinking is prior to speaking up so you understand their vocabulary.

https://en.wikipedia.org/wiki/Environmental,_social,_and_governance
https://content.copera.org/wp-content/uploads/2025/06/Stewardship-Report-2025.pdf
https://copera.org/about/board-and-leadership/board-meetings
https://copera.org/contact-us

READ THE FULL COMMENTARY AT COLORADO ACCOUNTABILITY PROJECT

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