Key Takeaways
- • Jay Rogers, a financial professional with over 30 years in private equity, private credit, and hedge funds, argues in The Hill that public pension boards are subordinating the exclusive-benefit duty owed to members to political ESG agendas.
- • CalPERS' $468 million commitment to a clean energy private equity fund made in 2007 had declined to approximately $138 million by March 2025, a loss of more than 71 percent, while the S&P 500 returned well above 300 percent over the same period, according to the article.
- • The article cites a 6.7 percent 20-year annualized CalPERS return against a 6.8 percent discount rate and a reported unfunded liability of $178.6 billion.
- • A 2024 New York City Retirement System case over a $4 billion fossil fuel divestment was dismissed on standing grounds, leaving the merits of politically motivated investment decisions unresolved.
- • The author proposes mandatory return attribution, independent fiduciary review of material investment constraints, and proxy-voting transparency as procedural reforms.
Summary
Jay Rogers, a financial professional and former expert witness in fiduciary and securities matters, argues in a column published by The Hill that public pension trustees are increasingly using "long-term value" to justify ESG investment mandates that subordinate beneficiaries' financial interests to political objectives. He contends that the accountability gap is structural rather than partisan, since public workers have little effective recourse when decisions go wrong.
Rogers points to fiduciary language governing public plans. California's Government Code requires CalPERS trustees to act "for the exclusive benefit of the members and beneficiaries of the system," and ERISA uses comparable "exclusive purpose" language for private pensions. He argues the word "exclusive" leaves no room for other social objectives the board finds compelling.
As evidence, the column cites CalPERS' 2007 commitment of $468 million to a clean energy private equity fund. By March 2025, combined distributions and remaining value had fallen to roughly $138 million, according to the article, while the S&P 500 returned well above 300 percent over the same period. The fund's managers reportedly collected at least $22 million in fees, and CalPERS declined The Center Square's public records request for the management contracts. Rogers also notes that CalPERS has since committed $5 billion to a custom climate-transition equity index and appointed a Chief DEI Officer. He cites a 20-year annualized return of 6.7 percent, below the 6.8 percent discount rate, and an unfunded liability of $178.6 billion.
The column also examines litigation. In 2023, participants in the New York City Retirement System sued three municipal pension funds over a $4 billion fossil fuel divestment. The court dismissed the case in 2024 on standing grounds, reasoning that defined-benefit participants cannot show concrete injury when taxpayers backstop benefits, and that taxpayers generally lack standing over trusts they do not control. Rogers notes the merits question was never reached.
Rogers also criticizes conservative responses. Texas Senate Bill 13, which mandated divestment from managers deemed to be boycotting fossil fuel producers, was estimated to cost more than $6 billion in lost returns over ten years, according to the article. A federal court permanently enjoined the law in February 2026 for targeting speakers based on viewpoint, and courts have struck down similar measures in Missouri and Oklahoma. He argues that replacing one politically mandated restriction with another is not fiduciary reform.
Rogers recommends procedural remedies: mandatory return attribution comparing ESG mandate costs against a passive benchmark in annual reports, independent fiduciary review of material investment constraints, and proxy-voting transparency requiring public funds to vote proxies on documented financial criteria. He concludes that Congress and state legislatures can implement these measures without adding new political mandates.
Rogers points to fiduciary language governing public plans. California's Government Code requires CalPERS trustees to act "for the exclusive benefit of the members and beneficiaries of the system," and ERISA uses comparable "exclusive purpose" language for private pensions. He argues the word "exclusive" leaves no room for other social objectives the board finds compelling.
As evidence, the column cites CalPERS' 2007 commitment of $468 million to a clean energy private equity fund. By March 2025, combined distributions and remaining value had fallen to roughly $138 million, according to the article, while the S&P 500 returned well above 300 percent over the same period. The fund's managers reportedly collected at least $22 million in fees, and CalPERS declined The Center Square's public records request for the management contracts. Rogers also notes that CalPERS has since committed $5 billion to a custom climate-transition equity index and appointed a Chief DEI Officer. He cites a 20-year annualized return of 6.7 percent, below the 6.8 percent discount rate, and an unfunded liability of $178.6 billion.
The column also examines litigation. In 2023, participants in the New York City Retirement System sued three municipal pension funds over a $4 billion fossil fuel divestment. The court dismissed the case in 2024 on standing grounds, reasoning that defined-benefit participants cannot show concrete injury when taxpayers backstop benefits, and that taxpayers generally lack standing over trusts they do not control. Rogers notes the merits question was never reached.
Rogers also criticizes conservative responses. Texas Senate Bill 13, which mandated divestment from managers deemed to be boycotting fossil fuel producers, was estimated to cost more than $6 billion in lost returns over ten years, according to the article. A federal court permanently enjoined the law in February 2026 for targeting speakers based on viewpoint, and courts have struck down similar measures in Missouri and Oklahoma. He argues that replacing one politically mandated restriction with another is not fiduciary reform.
Rogers recommends procedural remedies: mandatory return attribution comparing ESG mandate costs against a passive benchmark in annual reports, independent fiduciary review of material investment constraints, and proxy-voting transparency requiring public funds to vote proxies on documented financial criteria. He concludes that Congress and state legislatures can implement these measures without adding new political mandates.
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