Last month marked five years since the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the landmark financial reform legislation passed in response to the 2008 financial meltdown and championed by Massachusetts Senator Elizabeth Warren. The occasion is being marked with reflection on the causes of the crash, the successes of Dodd-Frank, and reminders that significant provision of the law remain unimplemented. For many investors who saw massive losses in 2008, Dodd-Frank represents hope for a stable and fair financial system that holds banks accountable.
Detractors of Dodd-Frank argue that more regulation will be harmful to the economy. Dean Baker, economist at the Center for Economic Policy Research, recently looked back at one of the business arguments levied against Dodd-Frank five years ago and finds it lacking. For a more in depth look at Baker’s work on the 2008 crash, check out The Origins and Severity of the Public Pension Crisis. In this 2011 piece he concludes that “Most of the pension shortfall . . . is attributable to the plunge in the stock market in the years 2007-2009” – just one of the ways that the meltdown continues to affect working people.
Recently, Senator Warren detailed her concerns with the SEC’s lack of action on Dodd-Frank, as well as other efforts to hold banks accountable, in a letter to SEC Chair Mary Jo White. Her concerns include the SEC’s failure to implement a section of Dodd-Frank that requires companies to disclose their CEO-to-median-worker pay ratio.
This summer, the IRI is celebrating the 10th anniversary of our first publication. In honor of the occasion, we are looking back at some of our favorite papers.
Eight years ago, the IRI took a first stab at what it would mean to implement responsible investment (RI) practices across a range of asset classes. Written for asset owners, money managers, consultants, and other investors looking for a way to invest responsibly across their portfolios, the Handbook on Responsible Investment Across Asset Classes aimed to shed light on asset classes that had received relatively less attention. For most of its history, responsible investment strategy had focused on public equities, and to a lesser extent, fixed income products, and the infrastructure to support social and environmental investment had developed accordingly. Less developed was the ecosystem for RI in asset classes like real estate, emerging markets, commodities, and cash, each of which carry unique risks and opportunities that appeal to different kinds of investors, and thus have different implications for a responsible investment strategy.
The Handbook aimed to encourage the participation and collaboration of a variety of investors by helping them to identify and evaluate opportunities for responsible investment in each asset class. According to IRI Director David Wood, “The Handbook was useful in the way that it was synthetic. For us, the asset-class approach helped link the mission-investing crowd looking for a social tool with the responsible-investment crowd looking for social benefits. And we learned through the process that there were groups doing similar work that were not talking to each other: community developers, real estate developers, international investors, various asset managers across asset classes.” Since the Handbook was published, the IRI has continued to build on this observation, working across sectors, geographies, and asset classes to help practitioners connect to and learn from each other.
This month, the TLF will host the National Council on Teacher Retirement’s Annual Trustee Workshop here at the Harvard Kennedy School. This three-day gathering will bring together 70 trustees from teacher pension funds across the country to take an in-depth look at a number of pressing issues related to public pension plans in the United States. We welcome select investment experts and teacher trustee leaders from across the country into dialogue about the political and economic landscape, emerging risks, potential opportunities, governance challenges and the latest thinking on fiduciary duty. A preliminary agenda is available on the NCTR website.