LACERA’s Corporate Governance Principles expand upon the fund’s Investment Policy Statement’s consideration of environmental, social, and governance (ESG) factors and responsible stewardship. The Corporate Governance Principles are guided by five core concepts that collectively provide a framework by which LACERA aims to promote sustainable investment returns and responsible stewardship of fund assets:
-Accountability: Governance structures and practices should be designed to promote the accountability of a firm's board of directors to the investors who provide the firm with capital. Accountability helps to ensure that a firm is managed in the best interests of its investors.
-Integrity: Integrity and trust are the cornerstone of financial markets and essential for economic stability. Core investor rights and protections are crucial to promoting integrity in financial markets.
-Aligned Interests: Compensation and incentive practices should align the interests of senior executives with those of investors.
-Transparency: Firms should provide investors with clear, comprehensive, and timely disclosures about fundamental elements of the firm's business and financial activities.
-Prudence: Firms should prudently identify, assess, and manage environmental and social factors that may impact the firm's ability to generate sustainable economic value.
LACERA's Corporate Governance Policy outlines the objectives, legal authority, and procedures guiding how LACERA acts on its Corporate Governance Principles. LACERA prudently exercises its rights as an investor to support policies and practices at portfolio companies, as well as public policies governing financial markets, that are consistent with LACERA's Corporate Governance Principles and economic interests in order to promote sustainable, long-term value on behalf of LACERA's members and enhance LACERA's ability to fulfill its mission. Such activities include responsibly voting the fund's proxies in adherence to the Corporate Governance Principles, corporate engagement, public policy advocacy, and investor collaboration.
In addition, management of ESG factors specifically related to the fund’s real estate investments are addressed in the fund’s Responsible Contractor Policy.
Each of these core policies is attached to the fund’s Investment Policy Statement to provide a cohesive and transparent policy framework by which fund assets are managed and address corporate governance and broader ESG factors.