Giving Compass' Take:

• Governing magazine explores how state pension funds are under increased scrutiny, with arguments about divestments in problematic companies.

• This post also highlights ESG investing, a strategy based on an asset’s environmental, social and governance factors. What can individual investors learn from the larger public debate?

• Here's more on why impact investing could be the next big thing for donor-advised funds.

As our nation has grown more politically divided, it’s become more tempting for politicians to use pension funds as a political club in the name of responsible investing.

Of course, social divestment isn’t new. It began in earnest in the 1980s as a reaction to apartheid. In protest, pension funds sold off their stakes in companies that were doing business in South Africa. Since then, funds have dumped tobacco stocks and holdings in companies doing business in Darfur because of ongoing human rights violations. More recently, there’s been increasing pressure on state and local pension funds to sell off equity in gun retailers, fossil fuel companies and private prisons. The American Federation of Teachers, for instance, lobbied teacher pension funds this year to cut their exposure to investment firms that funneled money into private prisons used to house migrants whose children had been separated from them at the border. The Chicago teachers fund obliged.

What is new is the extent to which public funds have embraced ESG investing. In fact, it’s a booming business: Assets under management in such portfolios have grown to an estimated $23 trillion globally, an increase of more than 600 percent over the past decade, according to mutual fund researcher Morningstar. Technology has helped increase the overall profile of ESG investing by making it easier for any investor — institutional or not — to adopt the approach and filter out unwanted assets.

Read the full article about politicizing the portfolio by Liz Farmer at Governing magazine.