City’s Roughly $100 Million Portfolio Passes Environmental, Social, and Governance Performance Investment Test

Pasadena’s roughly $100 million investment portfolio holds no direct stakes in fossil fuel producers or weapons manufacturers, a Finance Department review confirms ahead of Tuesday’s Legislative Policy Committee meeting.

Finance Director Karin Schnaider is expected to present the findings, which respond to a December committee request for verification. Members asked staff to confirm the portfolio aligned with socially responsible investing standards the city modified in 2021.

City Manager Miguel Márquez authorized the review, which examined compliance with environmental, social and governance criteria. The ESG framework guides city investments alongside protecting principal and ensuring liquidity.

Pasadena’s investment policy prioritizes “optimal environmental, social, and governance factors or outcomes,” according to the agenda report. The approach weighs how corporations respond to climate change, manage water resources and treat workers.

The 2021 policy modification established specific criteria across three areas. Environmental factors include carbon footprint and energy consumption. Social considerations cover labor rights and employee diversity. Governance standards address leadership structure and transparency.

City Treasurer investments must comply with California Government Code Section 53600. The policy applies to city funds while maintaining legal requirements, protecting principal and ensuring liquidity.

Officials developed the ESG framework after researching how other municipalities incorporated socially responsible investing, including review of a California Debt and Investment Advisory Commission white paper.

The Finance Department will continue quarterly investment reports to the Finance Committee and City Council. The investment policy does not cover Section 115 Trusts or the Fire and Police Retirement System, which operate outside the city’s cash pool.

Tuesday, 5 p.m. City Council Chambers, City Hall, Pasadena.