California pension trustees call for disclosures of #MeToo costs

A group of trustees from some of America’s biggest public pension funds are calling on companies to detail costs related to sexual misconduct and any measures they’re taking to address the problem.

“We don’t see how it could possibly be accretive to corporate value to have a culture that allows for sexual harassment in the workplace,” said Priya Mathur, the departing president of the $345-billion California Public Employees’ Retirement System, or CalPERS, the largest U.S. pension fund.

Companies are losing customers, paying settlements and higher insurance costs and being distracted “from their core strategies because they have to deal with this,” Mathur said.

Together with Sharon Hendricks — the board vice chair of the $219-billion California State Teachers’ Retirement System, or CalSTRS — Mathur formed Trustees United, a group of 13 of the state’s female pension fund trustees seeking to improve corporate disclosures on sexual harassment, violence and misconduct. They want companies to publicly declare how they investigate harassment complaints, disclose settlement costs to investors, and publish information about policies to protect workers and promote diversity.

“Without sufficient data, we really don’t know what companies are paying,” Mathur said. The first woman to chair the biggest U.S. pension fund, Mathur will end her tenure this week. “We can all list ways in which we think this is costly to companies and investors, but for us to do analysis and really identify which companies are developing a culture that is supportive of productivity and long-term value creation, we need more data,” she said.

California has been a leader in promoting diversity and taking action against harassment. As of 2019, new laws prohibit non-disclosure agreements in settlements of sexual harassment, assault or discrimination; require employee harassment training; and mandate that boards of publicly traded companies based in the state have at least one female director.

The new group — which also includes trustees from the Los Angeles City Employees’ Retirement System, or LACERS, and the Los Angeles County Employees’ Retirement Assn. — is asking its colleagues and pension fund trustees around the world to sign on to its principles.

The idea for the group started on a bus ride after a trustees’ network meeting last March on investment risks from sexual harassment. Mathur, Hendricks, CalSTRS board chair Dana Dillon and CalPERS board member Theresa Taylor decided they needed to join forces.

Over the course of the year, CalPERS’ and CalSTRS’ boards both adopted language in their investment policies aimed at pressing companies to disclose more about harassment. Similar language was proposed at a LACERS board meeting last week.

“I don’t think we’re alone in tackling these issues, but we’re at the top of the investment chain, so to speak, and we have a unique opportunity and responsibility to take this on,” Mathur said. “There’s clearly an inflection point in our society where we’re saying we’re no longer going to tolerate this behavior, and that’s an important signal to investors.”