Compliance with Statutory Investment Restrictions
As principal fiduciary of the Connecticut Retirement Plans and Trust Funds (CRPTF), Treasurer Denise L. Nappier believes that her first obligation is the long-term economic interest of the more than
212,000 plan participants and retirees. That responsibility is consistent with her view that corporate governance, including traditional governance issues such as board independence, sustainability factors
such as climate change, and global risk factors such as terrorism and human rights, is imperative to the long-term value and success of CRPTF investments. That view finds ample support in Connecticut law, which states that among the factors to be considered by the Treasurer, with respect to all securities, may be the social, economic and environmental implications of investments. In addition, the Treasurer is directed to consider the implications of investments in relation to the foreign policy and national interests of the United States.
In addition to the broad fiduciary authority granted by law, Treasurer Nappier has sought legislative support for statutes governing investments in companies doing business in Sudan, Iran and Northern Ireland, where issues of human rights and/or global terrorism have raised particular concern.
Treasurer Nappier’s approach is to engage with companies and seek to use the CRPTF’s influence as a shareholder to affect corporate behavior. As such, Connecticut has not adopted mandatory divestment laws—instead, retaining final authority with the Treasurer on the matter of whether divestment is warranted. This approach also accords appropriate deference to the federal government’s supremacy in areas of international relations and foreign policy. Connecticut’s Compliance Policy on Statutory Investment Restrictions is Appendix C, Section 1 of the
Investment Policy Statement.
2016 Report to the Investment Advisory Council:
Annual Report on the Connecticut Retirement Plans and Trust Funds’
Activities under Various Statutory Investment Restrictions
The Nappier administration was the architect of Connecticut’s Sudan Law, passed in 2006, in response to the genocide being perpetrated against the people of the Darfur region of that country. Since 2006, Connecticut has engaged with dozens of companies, using its influence where possible to encourage companies to act responsibly and not take actions that promote or enable human rights violations. The Treasurer has determined, for a limited number of companies, that divestment and
prohibition of future direct investment was warranted, based upon statutory criteria. Annually, the Treasurer reports to the Investment Advisory Council on activities of the past year under the Sudan law.
Sudan Prohibited Companies
In 2011, the Nappier administration proposed amending Connecticut’s Iran law (a remnant from the 1980s hostage crisis during the Carter presidency), bringing the statute up-to-date in response to concerns over that country’s nuclear development program and support of international terrorism. Like the Sudan law, the amended Iran law provides for engagement with companies doing business in Iran, seeking to ensure that the company’s conduct does not facilitate Iran’s nuclear development or support for terrorist groups. The Treasurer has determined, for a limited number of companies, that divestment and prohibition of future direct investment was warranted, based upon statutory criteria. Annually, the Treasurer reports to the Investment Advisory Council on activities of the past year under the Iran law.
Iran Prohibited Companies
The MacBride Principles are a corporate code of conduct for U.S.
companies doing business in Northern Ireland. The Principles were initiated, proposed and launched by the Irish National Caucus in November 1984, and designed to address religious discrimination in the workplace. They consist of nine fair employment and affirmative action principles. The principles deal with such issues as security for minority employees at work, the banning of provocative religious or political emblems in the workplace, and increasing the representation of Catholics in the work force.
As originally adopted in Connecticut in 1987, the law was a mandatory divestment law, requiring the State Treasurer to divest all state funds invested in any corporation doing business in Northern Ireland that had not implemented the MacBride Principles, and prohibiting any state investment in any corporation doing business in Northern Ireland that had not implemented the MacBride Principles. With the adoption of the Good Friday Agreement (1998) and the incorporation of nearly all of the principles into the law of Northern Ireland, the Treasurer successfully proposed in 2012 that the law be amended to align with other Connecticut statutes—which authorize but do not require divestment. Annually, the Treasurer will report to the Investment Advisory Council on activities of the past year under the MacBride law.
MacBride Prohibited Companies