Investments - Policy - Statement of Purpose:  Holdings in Companies with Connections to Prohibited Nations

The Louisiana Legislature provides guidance to all state public retirement systems with regard to investments in companies which operate in, or have relationships with, countries designated by the United States government as Prohibited Nations. La. R.S. 11:312 (Act 9 of the 2005 Regular Session of the Louisiana Legislature) requires all public retirement systems in Louisiana to report to the House Committee on Retirement and the Senate Committee on Retirement all holdings in companies conducting business in or with Iran, Libya, North Korea, Sudan, or Syria.

Under the provisions of the Act, "The report shall include the name of each such company, the asset allocation class and sector to which it belongs pursuant to the board's asset allocation policy, and the amount of system funds invested therein."

LASERS Statement of Purpose with regard to Prohibited Nations is as follows:

• Support the Global War on Terrorism
• Avoid penalizing companies whose activities abroad are supported by the U.S. government
• Avoid penalizing companies whose activities abroad do not further terrorism
• Avoid unnecessarily harming U.S. companies and jobs
  
• Identify credible sources of information regarding companies who are actually aiding and abetting terrorists
  
• Develop a methodical strategy for investments
  

Divestiture of assets is an issue of concern at many public pension funds, but if LASERS divests its assets from a company, it is no longer a shareholder and loses the ability to influence the company to change its business practices. Shareholder activism pressures companies to make changes in management or policy. This collective influence on the companies can be applied on a case-by-case basis. LASERS works with the Council of Institutional Investors, which has taken the lead in asking the U.S. government for increased disclosure and government guidance on which companies are acting in a manner contrary to U.S. foreign policy goals by supporting terrorism.

Louisiana statutes governing the management of investments by the state retirement systems outline the fiduciary responsibilities of all LASERS Trustees to the System's members. Under the provisions of La. R.S. 11:264 - 264.8, each fiduciary must "discharge his duties with respect to the system in the exclusive interest of the members and beneficiaries." The LASERS Board of Trustees has taken the position that its members are obligated to invest funds solely in the financial interest of plan members and not to consider specific social or economically targeted goals unless it complies with the fiduciary duties outlined in the statutes.