Legislation would require investment analysis for geopolitical risk for public fund investments

New legislation filed in December by Pennsylvania Rep. Clint Owlett (R-Tioga/Bradford) would require an analysis of geopolitical risk on any investments of public funds.

The legislation comes in light of substantial investor losses in private funds invested in Russia and Belarus following the invasion of Ukraine, Owlett said. Because the state Treasury and state public pension funds invest in financial assets in foreign countries, the legislation would ensure those funds are protected by an examination of the risk involved, his office said. Combined, the Treasury and state public pension funds invest about $150 billion in taxpayer assets, the office said.

“Pennsylvania’s public investment funds make up a significant amount of taxpayer assets and there could be a large amount of money at risk when they are invested in financial assets held by foreign countries, depending on the geopolitical landscape of the time,” Owlett said.

The legislation would also require the public investment funds to compile a report annually outlining its investments in foreign nations and submitting that report to the General Assembly.

“While the Commonwealth has done the right thing by recently divesting itself of Chinese financial assets in the State Treasury while maintaining historic divestiture in public funds of financial assets connected to other hostile nations like Iran, Sudan, Russia and Belarus, an ever-forward looking approach should be instituted so we can avoid a huge ripple effect when foreign investments tank because of rapidly changing geopolitical circumstances,” Owlett said.