ESG Head Leaves Texas Teachers’ Pension

The Teacher Retirement System of Texas is required by law to boycott companies that divest fossil fuels.

Lauren Gellhaus, the head of environmental, social, and governance (ESG) at the Teacher Retirement System of Texas (TRS), has left the $200 billion pension fund after nearly five years.

 “Last week, I ended an amazing chapter in my career,” Gellhaus wrote in a post on LinkedIn. “While I am thrilled for the next chapter (more on that soon), I am so grateful to all the folks at TRS.”

Gellhaus jointed Texas TRS in 2017 as transition lead for the retirement system’s investment operations department. In that role, she oversaw cash management for the trust, and was the point person for all external cash and securities transitions. The following year she joined the TRS’ external public markets team and maintained coverage of hedge fund and long-oriented mandates.

In January of 2020, Gellhaus was named the retirement system’s first head of ESG to oversee the strategic development and execution of TRS’ ESG initiatives. She said she was particularly proud of adding board-approved ESG language to the investment policy statement, establishing an ESG committee, and creating an educational series, among other achievements during her nearly three years in the role.

Although Gellhaus did not say why she was leaving TRS, ESG investing has become much more complicated in Texas since a state law enacted last year requires all state entities to essentially boycott companies that divest or shun fossil fuel investments. Divesting or avoiding investments in fossil fuels is a major part of almost any ESG strategy. The law prohibits Texas’ public pension funds from contracting with or investing in companies that boycott energy companies. The law defines the action of boycotting an energy company as refusing to deal with, terminating business activities with, or taking any action “intended to penalize, inflict economic harm on, or limit commercial relations” with energy companies.

The law is intended to specifically protect companies that engage “in the exploration, production, utilization, transportation, sale, or manufacturing of fossil fuel-based energy and does not commit or pledge to meet environmental standards beyond applicable federal and state law.”

Other state governmental entities the law applies to include the Employee Retirement System of Texas, Texas Municipal Retirement System, Texas County and District Retirement System, Texas Emergency Services Retirement System, and Permanent School Fund.

Texas TRS did not comment on whether it was looking to replace Gellhaus, who officially left Aug. 8, as a spokesperson said the retirement system typically doesn’t comment on employee matters. But according to the pension fund’s investment policy statement it “will consider ESG factors that are material to long-term returns and levels of risk.”

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