Should Connecticut consider a company’s record on climate change and labor rights when deciding how to invest the state’s pension funds?
That is one of the defining questions of this year’s race for state treasurer, an office that manages nearly $69 billion in pension assets for Connecticut’s teachers and public workers.
State Treasurer Erick Russell, a Democrat from New Haven who is seeking a second four-year term in office, argues that the treasurer’s office should consider the way companies treat the environment and workers when making investments. That record is “part and parcel with driving strong returns on long-term investments,” he told the Independent in a recent interview.
Russell’s challenger, a Norwalk-based Republican named Fred Wilms, disagrees. “If we start to bring in social or political considerations, we’re moving away” from the treasurer’s key responsibility: investing funds in a way that provides “the most secure retirement future” for pensioners.
Wilms, a former state representative, called for turning the office’s “personal, clubby atmosphere” into something more “professional,” beginning by placing fiduciary duty for the pension into an investment board. (Last year, Russell and Gov. Ned Lamont opposed a similar proposal.)
Since taking office in 2023, Russell — a rising star in Connecticut’s Democratic Party — has launched a Baby Bonds program, which automatically invests $3,200 on behalf of every baby born in Connecticut under Medicaid coverage.
He has created a privately funded Safe Harbor Fund for people from outside of Connecticut who are seeking reproductive or gender-affirming care in the state.
And he has added billions to the state’s pension assets.
In the decade before Russell took office, Connecticut’s pension had badly lagged its peers. Since 2023, however, the pension achieved three years of double-digit returns, and in 2025, the fund’s performance ranked in the top 17 percent of all public pension funds.
Russell admitted that much of that performance can be attributed to the stock market’s outstanding returns over the last three years. Still, he argued, growing the investment team and changing the pension’s asset allocation played key roles in boosting the fund’s performance.
“There’s been a lot of structural changes around the fund, led by our incredible investment team,” said Russell.
While achieving strong returns, the treasurer’s office pressed companies on their climate, labor, and governance policies, said Russell. “At the same time that we’re doing work on behalf of pensioners and taxpayers, we can also make sure that we’re aligning our investments with our values.”
According to a 2025 report, the treasurer’s office worked with 15 healthcare companies to address risks related to artificial intelligence (A.I.) It also encouraged companies to set greenhouse gas emissions targets and improve the diversity of boards.
Russell said the office also used its Tesla proxy vote to oppose Elon Musk’s trillion dollar pay package.
Wilms was more skeptical about coupling ESG (Environmental, Social, and Governance) goals with long-term performance. “I think we should move away from ESG,” he told the Independent. On his website, he calls for “resisting ESG principles” and “eliminating underperforming investments, no matter how politically fashionable they may be.”
The disagreement between Russell and Wilms reflects a nationwide debate over ESG. (Click here to read about Russell’s split with Republican candidate Harry Arora on this very same topic during the 2022 race for state treasurer.)
Under the Biden administration, pension fiduciaries could consider ESG factors when choosing between two equally compelling investments, but the Trump administration is threatening to roll back that initiative. Connecticut statute currently empowers the state treasurer to consider ESG.
The state pension fund only considers ESG factors from the perspective of risk, stressed Russell. “This is not us putting money in a fund that is all about investing in good things,” he said. But “doing the right thing” on ethics and sustainability “usually aligns well with long-term returns.”
As an example, Russell cited the coal industry.
American Pacific, a manufacturing company, had been running 12 coal plants across the country. Russell said the treasurer’s office convinced the company to shut down the plants and retrain their coal workers for other jobs. “If we had divested, we wouldn’t have had the seat at the table to actually drive that change,” he told the Independent.
When asked about the American Pacific example, Wilms disagreed with Russell’s analysis. “You don’t need to look at it through the ESG perspective,” he argued. “It’s pretty obvious that coal is being downsized in the U.S.,” making it a bad investment on financial grounds alone.
Some of Connecticut’s other ESG commitments include prohibiting investments in private prisons and civilian gun manufacturers. According to Russell, those bans are in place because the companies pose “long-term risk to the portfolio” and “are not worth the headline risk.”
“I think we have shown that we can do” ethical investing “in a way that is still beneficial to the state of the pension,” said Russell.
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