Trustees from CalSTRS, CalPERS and the Los Angeles city and county pension funds have created the Trustees United Principles, designed to promote workplaces free of sexual harassment, misconduct and violence and reduce the associated costs to investors.
Citing the past year's allegations against film producer Harvey Weinstein and the subsequent bankruptcy of the Weinstein Co. as well as casino mogul Steve Wynn and the ensuing loss of $2 billion in value for Wynn Resorts, the principles are meant to recognize the risk to investors that sexual harassment and misconduct create. Those risks “have the potential to do long-term damage to companies' bottom line and consequently to the pension funds' portfolios,” said a news release from the $219.2 billion California State Teachers' Retirement System, West Sacramento.
Trustees United has created four principles to guide investors' actions to manage that risk:
- Corporations must ensure “a work environment free to sexual harassment and violence.”
- The use of forced arbitration and non-disclosure agreements perpetuates a culture of silence surrounding harassment.
- Corporations must promote diversity at all levels.
- Policies and agreements such as collective bargaining agreements can mitigate risk by addressing power imbalances.
“From my perspective, as a representative of the trustees for the world's largest educator pension fund, our concern goes beyond the immediate fall in company value,” Sharon Hendricks, CalSTRS' vice chairwoman, said in the news release. “Less visible — but no less real — are the missed opportunities to create long-term value due to the adverse impact sexual harassment and misconduct have on corporate culture. The trustee principles were conceived as a catalyst for expanded engagement on an issue that remains largely invisible to investors.”
A total of 13 trustees from CalSTRS, the $339.9 billion California Public Employees' Retirement System, Sacramento; the $56 billion Los Angeles County Employees Retirement Association, Pasadena; and the $16.8 billion Los Angeles City Employees' Retirement System signed the principles.
The principles appear on the Trustees United website.
