Working at the city treasury certainly doesn’t seem like the most exciting job to most people. City treasurers or chief financial officers are very likely to have some clever, ironic way of saying they have the most boring job in city government.

At the Boston Treasury Department, overseen by Boston Chief Financial Officer Emme Handy, the team can sometimes feel a bit of FOMO — fear of missing out — as they watch their colleagues around them in city government make announcements about things like workforce gender equity, increased funding for immigrant legal defense, a thousand more Section 8 Vouchers. Even the Boston regional planning agency just hired its second artist-in-residence.

“Other departments are doing really great, important things that are very visible to folks in terms of affordable housing and positive police-community relations, the list goes on,” Handy says. “There’s so many things that the city is pro-actively engaged in, and so we wanted to take the spirit of that, of what the city does every day in some of our forward-facing departments and try to apply that to some of the back-of-the-house type work that the treasury department and the administration and finance cabinet in general does.”

At any moment, the City of Boston has about $1.5 billion in its various operating accounts held at a collection of banks in the Boston area. Under Handy’s leadership, the Boston Treasury Department has joined a number of others all around the country who think city deposits can be put to better use while they are sitting around. In Boston, the Treasury Department has found at least $250 million that it has authority and flexibility to invest toward a higher purpose.

“There’s a way that we can do what we’re supposed to, which is first and foremost keep the money safe, but [there is also] a way that we can leverage these particular assets to perform some kind of secondary goal,” says Drew Smith, who works at the Boston Treasury Department.

Some of that $250 million will be relatively easy to move. As codified now under the city’s new cash investment policy, which the treasury department adopted earlier this year, the city has committed to keeping a minimum of $100 million deposited in community banks around Boston — and Smith intends to exceed that number.

New city accounts at community banks will likely function similarly to accounts at larger regional and national banks where Boston currently has deposits, so there’s not too much of a change when it comes to accessing those dollars when the city needs to actually spend them.

Not every community bank is equal, but Boston already has a way to determine a bank’s impact on the city. By statute, since 1999, Boston has required that any institution wishing to provide banking services to the city or to become a city depository to annually report on loan activity and community development participation and services inside Boston. The result has been the city’s annual “Linked Deposit Reports,” online versions of which are available going back to 2011.

“We expect that $100 million to be split between a number of community banks,” Smith says.

Things will be very different for the other $150 million. The Boston Treasury Department crunched the numbers and determined it could move that amount into slightly riskier investments that offer higher rewards, in terms of environmental and social returns, while still offering comparable flexibility and financial return to what it could get from a bank. This $150 million commitment is also codified in Boston’s new cash investment policy, the “Environmental, Social, Governance (ESG) Investment Initiative.”

The cash investment policy, adopted Feb. 22, 2019, defines ESG investment as “the process of incorporating analyses of non-financial environmental, social, and governance factors into investment decisions alongside more traditional financial criteria” — which is roughly in line with broader industry definitions of ESG investment.

Out of $46.6 trillion managed by financial firms in the United States, an estimated $11.6 trillion are invested using some kind of ESG investment approach, according to US SIF: The Forum for Sustainable and Responsible Investment, a trade organization for ESG investors. Thats up from just $3 trillion a decade ago.

While it could hire someone in-house to manage its ESG investments, Boston will be looking to hire an ESG investment firm (or an ESG investment team at a traditional investment firm). There’s plenty to choose from in Boston, including Bain Capital’s Double Impact team, led by former Massachusetts governor Deval Patrick.

More and more dollars invested using an ESG approach means more and more financial firms and advisors to choose from. But that also makes it all the more challenging to find a firm that can truly demonstrate alignment with broader public policy priorities like gender or racial equity, criminal justice reform, or workers rights. Some of these firms pledge to avoid investments in fossil fuels, but may still be investing in private prisons or predatory lending. Cities may also wish to invest their money with a firm run by a woman or person of color, but that’s another challenge: Less than one percent of professionally managed investment assets in the U.S. are managed by firms run by women or people of color, according to a 2017 report by the U.S. Government Accountability Office.

“Everybody needs to distinguish themselves one way or another, and doing ESG is an easy way to justify why you’re charging a certain level of fees or ‘here’s why you should come to us or stay with us,’” says Andrea Armeni, executive director of Transform Finance, a network of investors and institutions that seek to promote social justice through their investing practices. “So there’s a little bit of that [watering-down] dynamic, but there are people doing really, really good ESG work now, more so than you would have seen in the past.”

The Boston Treasury Department hasn’t yet released an official request for proposals from potential ESG investment firms, but it’s already started having informal conversations.

“Having those conversations, which sometimes can go in different directions, can be very helpful to us, helping us determine what our understanding is [of ESG investment] and frankly can inform what that RFP looks like,” Smith says.

The search for how to invest this $150 million from the city’s operating cash accounts could eventually also inform a parallel process down the line for the Boston City Pension Fund dollars, which are managed separately but are now under the microscope for the way they might be invested in ways that seek to go beyond mere financial return (see Next City’s previous reporting on that dialogue).

One big constraint for these operating funds versus pension fund dollars: Operating funds have to be invested in ways that ensure easy access later, which generally means shorter-term investments — no long-term investments in affordable housing or black-owned startups that will need to hold onto the cash for longer than the city can leave it out there.

“These have to be cash equivalents, not longer-term investments, so these are not funds that we can use to support long-term projects in local Boston,” Handy says. “These are quick investments that will help in the short term support some ESG-oriented businesses. We would also certainly welcome some opportunities that would be Boston based, but that will depend on the financial advisor’s network. We’ll have to see what some of the results are with the RFP.”