Can Virginia's pension trustees consider ESG factors when investing the retirement fund?

Plain-English summary

Delegate Nicholas Freitas asked the Virginia AG whether the Board of Trustees of the Virginia Retirement System could weight environmental, social, or corporate governance (ESG) factors when investing the state's pension fund. Attorney General Jason S. Miyares concluded it could not.

The opinion turns on two layered duties. The Virginia Constitution, in Article X, § 11 (amended in 1996 by referendum), declares the VRS funds "separate and independent trust funds" that "shall be invested and administered solely in the interests of the members and beneficiaries thereof." Va. Code § 51.1-124.30 mirrors that command at the statutory level, ordering the Board to discharge its duties "solely in the interest of the beneficiaries." Together, the constitution and the statute codify the common-law trustee duty of loyalty: when the Board acts as trustee of pension assets, it must "exclude all selfish interests and all consideration of the welfare of third persons."

ESG investing is, by definition, an attempt to advance third-party or public-policy goals (environmental impact, social outcomes, corporate-governance reform) alongside or instead of beneficiary financial outcomes. The AG reasoned that even a "salutary" public benefit is "insufficient to warrant investment by the VRS Board" if the basis for the investment is anything other than the beneficiaries' financial interest. The Board can only invest with the prudence of "a prudent person acting in a like capacity and familiar with such matters" with "like aims," and the aim Article X, § 11 prescribes is the financial security of public-employee retirees, period.

The AG noted that incidental third-party benefits do not violate the duty (citing Donovan v. Bierwirth), and that ERISA's similar but distinct private-sector framework reaches the same conclusion. He also pointed to identical AG conclusions in Kentucky (2022 Op. Ky. Att'y Gen. 22-05) and Indiana (2022 Op. Ind. Att'y Gen. No. 3).

What this means for you

If you serve on the VRS Board or as a Board officer

You should not adopt or vote for an investment policy that uses ESG screening, ESG-weighted manager selection, or ESG-based proxy voting unless you can demonstrate that each ESG factor functions as a financial-risk indicator that contributes to beneficiary returns. The opinion does not foreclose treating climate-transition risk or governance failures as financial risks, what it forecloses is treating them as ends in themselves. Document the financial rationale for any factor you consider, and avoid framing decisions in terms of social or environmental outcomes the fund is "supporting." § 51.1-124.20(J) makes Board members removable for neglect of duty.

If you are a member or retiree of VRS

Your interest is statutorily privileged. The fund's job is to maximize the financial security of your retirement, not to advance or oppose any external cause. If you see Board materials suggesting otherwise, this opinion gives you a clean basis to ask the Board for the financial-risk justification of any non-traditional screen.

If you are an investment consultant or asset manager pitching VRS

Pitches built on ESG branding or "values-based" framing have no traction with the VRS Board after this opinion. Reframe in terms of risk-adjusted returns and the prudent-person standard, and be prepared to support each factor as a financial input, not a normative one. Pitches that promise "incidental" social benefits while the principal aim remains financial are still permissible (Donovan v. Bierwirth), but the aim has to be financial first.

If you are a state legislator considering pension legislation

The opinion confirms that investment-policy mandates layered onto VRS by statute (whether to adopt or to forbid ESG screens) interact with both Article X, § 11 and § 51.1-124.30. Legislative changes that would direct the Board to consider non-financial factors face a constitutional speed bump, since the Constitution itself imposes the sole-interest rule. Direction the other way (forbidding ESG factors) is consistent with the existing duty of loyalty and is largely declarative of current law.

Common questions

Q: Can the Board ever consider ESG-labeled factors?
A: Yes, but only when they function as financial-risk inputs. The duty is to evaluate transactions "solely on the basis of [their] benefits to the retirement system beneficiaries." If a governance failure indicates fraud risk, a Board can weight it. If a climate-transition risk creates stranded-asset risk, a Board can weight it. What the Board cannot do is weight a factor because it advances the policy preferences of the trustees, the executive, or the public.

Q: Why does the constitution control here?
A: Because the 1996 amendment was specific. It declared the VRS funds "separate and independent trust funds" and limited their use to "benefits, refunds, and administrative expenses." That language was added in response to a 1994 JLARC report and a public referendum following concerns about politicized investing in the late 1980s and early 1990s. The constitution, not the statute, is the senior authority.

Q: Does ERISA apply to VRS?
A: No. VRS is a public-employee plan and ERISA covers private-sector pensions. The opinion uses ERISA's similar fiduciary structure as a comparative checkpoint (citing Pegram v. Herdrich and Fifth Third Bancorp v. Dudenhoeffer), but Virginia's source of law is Article X, § 11 and § 51.1-124.30.

Q: Does this prevent VRS from buying or holding any specific stocks or funds?
A: It does not impose a list. It imposes a process. The Board can hold any investment that satisfies the prudent-person standard for its beneficiaries. What the Board cannot do is screen in or screen out an investment because of ESG goals, divestment campaigns, or any other consideration that is not a beneficiary financial input.

Q: What about indirect investments, like index funds that incorporate ESG screens at the manager level?
A: The opinion does not specifically address third-party fund choices, but the principle extends. The Board's duty is to evaluate each investment vehicle on the basis of beneficiary financial interest. If an indexed product's ESG screening reduces beneficiary returns or increases risk without corresponding financial justification, the Board would be at risk of breaching its duty of loyalty by using it.

Q: Is this a new rule for Virginia?
A: No. The duty of loyalty has been on the books since the 1971 Constitution and was reinforced by the 1996 amendment. The 1990 AG opinion concerning South Africa divestment had already concluded that an executive directive could not alter the Board's fiduciary scope. This 2024 opinion applies the same framework to a contemporary issue.

Background and statutory framework

The Virginia Constitution's pension provision was originally adopted in 1971, requiring only that the system be "administered in the best interest of the beneficiaries." The current language was added in 1996 after voters approved a referendum: "Shall the Constitution of Virginia be amended to provide that the funds in the governmental employees retirement system shall be trust funds and be invested and administered solely in the interests of the members and beneficiaries of the system?"

Two 1990s episodes drove that amendment. First, state and local governments had been borrowing from VRS at below-market rates, which the Senate viewed as unfair to public employees. Second, JLARC's 1994 report on VRS flagged concerns about "the appearance of undue influence of political considerations" in investment decisions. The constitutional amendment, the JLARC reforms, and the statutory updates to Title 51.1 grew out of that recommendation set.

§ 51.1-124.30 implements the sole-interest rule and adds the "prudent person" standard from common law: act with the "care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims." The "enterprise" and "aims" referenced are the retirement system's mission, defined by § 51.1-124.1, of "providing adequate benefits and pensions to members, encouraging stable employer contribution rates, and ensuring the overall soundness of the Retirement System."

The AG read those layered authorities together: a constitutional sole-interest rule, a statutory duty of loyalty, a statutory prudent-person standard, and a defined statutory mission, all pointing to financial outcomes for beneficiaries. ESG investing, in its policy-driven form, sits outside that scope. The Board's authority "exists only to the extent specifically granted by the law" (Tate v. Ogg), and § 51.1-124.30 does not grant authority to invest for ESG goals.

Citations

• Va. Const. art. X, § 11 (sole-interest rule for VRS funds)
• Va. Code Ann. § 51.1-124.30 (duty of loyalty and prudent-person standard)
• Va. Code Ann. § 51.1-124.1 (VRS purposes)
• Va. Code Ann. § 51.1-124.20(J) (removal of Board members)
• Va. Code Ann. § 51.1-124.3 (definition of beneficiary)
• Pegram v. Herdrich, 530 U.S. 211 (2000) (trustee duty of loyalty)
• Donovan v. Bierwirth, 680 F.2d 263 (2d Cir. 1982) (incidental third-party benefit acceptable)
• Lindsey v. Gillmer, 188 Va. 1 (1948) (VRS funds for distinct retirement purpose)
• 1990 Op. Va. Att'y Gen. 1 (executive divestment order does not alter Board duty)
• 1992 Op. Va. Att'y Gen. 138, 141 (public-purpose investment alone insufficient)
• 2022 Op. Ky. Att'y Gen. 22-05 (parallel ESG fiduciary conclusion)
• 2022 Op. Ind. Att'y Gen. No. 3 (parallel ESG fiduciary conclusion)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2024/23-062-Freitas-issued.pdf

Original opinion text

COMMONWEALTH of VIRGINIA

Office of the Attorney General

Jason S. Miyares 202 North Ninth Street
Attorney General Richmond, Virginia 23219
804-786-2071

August 16, 2024 Fax 804-786-1991

Virginia Relay Services
800-828-1120
7-1-1
The Honorable Nicholas J. Freitas
Member, House of Delegates
Post Office Box 693

Culpeper, Virginia 22701
Dear Delegate Freitas:

I am responding to your request for an official advisory Opinion in accordance with § 2.2-505 of
the Code of Virginia.

Issue Presented

You inquire whether the Board of Trustees of the Virginia Retirement System is authorized to make
investment decisions based on environmental, social, and/or corporate governance policies rather than
financial considerations exclusively.

Response

It is my opinion that Virginia law imposes fiduciary duties on the Board of Trustees that preclude
it from basing investment decisions on environmental, social, and/or corporate governance policies rather
than financial considerations.

Applicable Law and Discussion

Article X, Section 11 of the Constitution of Virginia provides for the creation of a retirement system
for government employees. It specifically directs the General Assembly to “maintain a retirement system
for state employees and employees of participating political subdivisions and school divisions.”' Although
“(t]he retirement system shall be subject to restrictions, terms, and conditions as may be prescribed by the
General Assembly[,]” the Constitution further provides that the retirement system funds “shall be deemed
separate and independent trust funds . . . and shall be invested and administered solely in the interests of
the members and beneficiaries thereof.” The retirement trust funds “shall be invested as authorized by law”
and are strictly prohibited from being used “for any purpose other than as provided in law for benefits,
refunds, and administrative expenses . . . .”? In addition, “benefits shall be funded using methods which are
consistent with generally accepted actuarial principles.”

"Wa. CONST. art. X, § 11.
2 Id.
3 Id.
4 Td.

Honorable Nicholas J. Freitas
August 16, 2024
Page 2

Pursuant to its constitutional directive, the General Assembly “establishe[d] the Virginia
Retirement System as an independent agency of the Commonwealth” to “be administered in the best
interests of the beneficiaries thereof.’® The Virginia Retirement System (VRS) was further designed
specifically for “the purposes of providing adequate benefits and pensions to members, encouraging stable
employer contribution rates, and ensuring the overall soundness of the Retirement System[.]”’
Administration of the VRS is vested in a Board of Trustees (the Board), upon which the General Assembly
has conferred numerous statutory powers and duties.’ In administering the VRS, the Board serves as the
trustee of all VRS funds,’ and the law recognizes that the Board has a “fiduciary duty” in fulfilling its role
as fund trustee.'!° Board members are subject to removal for neglect, misuse of office, or incompetence in
the performance of their duties."

Pertinent to your request, the Board is expressly empowered “‘to invest and reinvest [VRS] funds
as authorized by law.”'* You inquire regarding the Board’s authority to make investment decisions based
on environmental, social, and/or corporate governance (ESG) policies. As commonly understood, ESG-
based investment involves “investors seek[ing] out socially conscious companies and try[ing] to facilitate
change in companies to achieve ESG-related goals[,]’”!? and “ESG investment is an umbrella term for an
investment strategy that emphasizes the corporate governance structure or the environmental or social
impact of a company’s products and practices.”

Although the administrative powers of the Board generally are not limited to those explicitly set
forth in the Code,'> the Board’s investment of trust funds is “governed exclusively” by Article 3.1 of the
Code chapter governing the VRS, which article contains Code §§ 51.1-124.30 through 51.1-124.40.'® None
of these statutory provisions grants the Board specific authority to make investments according to ESG
policies.

Rather, consistent with Virginia’s Constitution, Code § 51.1-124.30 directs that the Board “shall
discharge its duties with respect to the Retirement System so/e/y in the interest of the beneficiaries
thereof.”!’ Both the constitutional and statutory provisions thus codify and impose on the Board a common

5 Va. CODE ANN. § 51.1-124.1 (Supp. 2023).
6 Td; VA. CONST. art. X, § 11.

7 VA. CODE ANN. § 51.1-124.1.

8 Section 51.1-124.22(A) (2020).

° Td.

0 Sections 51.1-124.24(A) (2020); 51.1-124.26 (2020) (requiring the Board, respectively, to employ a chief
investment officer and to appoint an Investment Advisory Council to “assist the Board . . . in fulfilling its fiduciary

duty”).
"l Section 51.1-124.20(J) (2020) (referencing removal pursuant to Code §§ 24.2-230 through 24.2-238),.
'2 Section 51.1-124.30(A) (2020) (emphasis added).
'3 Eric C. Chaffee, Index Funds and ESG Hypocrisy, 71 CASE W. RES. L. REV. 1295, 1296 (2021).
'4 Akio Otsuka, ESG Investment and Reforming the Fiduciary Duty, 15 OHIO ST. BUS. L.J. 136 (2021).
'S See § 51.1-124.22(A).
'6 See also § 51.1-124.35 (2020).
'7 Section 51.1-124.30(C) (emphasis added).

Honorable Nicholas J. Freitas
August 16, 2024
Page 3

law fiduciary duty of loyalty to VRS beneficiaries.'* Adherence to this duty requires the Board to “exclude
all selfish interests and all consideration of the welfare of third persons.”'

Section 51.1-124.30 further establishes the standard of care the Board is to follow in executing its
fiduciary duty: VRS assets are to be invested “with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and with like aims.””° In construing this
specified standard of care, the primary “objective is ‘to search out and follow the true intent of the
legislature[.]’”?! “Although our focus is generally on the plain meaning of unambiguous statutory language,
we must also consider that language in the context in which it is used.””? Courts seek “to adopt that sense
of the words which harmonizes best with the context, and promotes in the fullest manner the apparent policy
and objects of the legislature.”?? Accordingly, the prescribed standard of care must be read “not in a vacuum,
but with reference to the statutory context, ‘structure, history, and purpose.’””*

Virginia law makes clear that the VRS is to be administered only on behalf of its members or
beneficiaries.” Other Virginians and society at large are not the intended beneficiaries of the VRS.” Rather,
the VRS was “established as a retirement system for teachers, State employees and employees of

'8 “'T]he common law . . . charges fiduciaries with a duty of loyalty to guarantee beneficiaries’ interests: ‘The
most fundamental duty owed by the trustee to the beneficiaries of the trust is the duty of loyalty. . . . It is the duty of
a trustee to administer the trust solely in the interest of the beneficiaries.” Pegram v. Herdrich, 530 U.S. 211, 224
(2000) (quoting 2A A. SCOTT & W. FRATCHER, TRUSTS § 170, p. 311 (4th ed. 1987)). See BOGERT’S THE LAW OF
TRUSTS AND TRUSTEES § 543 (“Perhaps the most fundamental duty of a trustee is the trustee’s duty of loyalty to the
beneficiaries, often stated as the duty to act solely in the interests of the beneficiaries.”).

'9 McIver v. Salomonsky, 5 Va. Cir. 524, 528 (City of Richmond Cir. Ct. June 13, 1978); accord RESTATEMENT
(THIRD) OF TRUSTS § 78 (2007) (quoting George T. Bogert, Trusts § 95 (Hornbook, 6th ed. 1987) (“The trustee owes
a duty to the beneficiary to administer the affairs of the trust solely in the interests of the beneficiaries, to exclude from
consideration his own advantages and the welfare of third persons.”). The duty is not violated when aspects of a
particular action also might benefit other parties incidentally. See Donovan v. Bierwirth, 680 F.2d 263 (2d Cir. 1982).

20 Section 51.1-124.30(C) (emphasis added). The Board generally is further instructed to “diversify such
investments so as to minimize the risk of large losses... .” /d.

21 Thornton v. Commonwealth, 78 Va. App. 321, 330 (2023) (quoting Colbert v. Commonwealth, 47 Va. App.
390, 394 (2006)).
22 City of Hampton v. Williamson, 302 Va. 325, 333 (2023) (quoting Potter v. BFK, Inc., 300 Va. 177, 182 (2021)).
23 Thornton, 78 Va. App. at 330 (quoting Colbert, 47 Va. App. at 394).
24 Abramski v. United States, 573 U.S. 169, 179 (2014) (quoting Maracich v. Spears, 570 U.S. 48, 76 (2013)).
25 WA. CONST. art. X, § 11; VA. CODE ANN. §§ 51.1-124.1; 51.1-124.30. As a previous Opinion of this Office
explains, the constitutional provision establishing the duty of loyalty
originated during the 1969 Special Session of the General Assembly due to concerns over the practice of
allowing state and local government borrowing from the Retirement System at low interest rates. . . . [This
practice] was not in the best interest of the beneficiaries of the fund. During debate of the issue in the
Senate, it was observed “‘retirement funds are a trust and should be invested at the highest and best rate
consistent with trust obligations,’ and that it was unfair to public employees ‘to permit their funds to be
invested at less than the best interest rate available.”
2003 Op. Va. Att’y Gen. 140, 142 (footnotes and citations omitted) (citing 2 A.E. DICK HOWARD, COMMENTARIES
ON THE CONSTITUTION OF VIRGINIA 1135 (1974)).
26 See VA. CODE ANN. § 51.1-124.3 (Supp. 2023) (defining “beneficiary” to mean “any person entitled to receive
benefits under [the VRS]”).

Honorable Nicholas J. Freitas
August 16, 2024
Page 4

participating political subdivisions and other qualifying employers[.]’”’ The sole purpose of the retirement
system is to foster financial security for public employees upon their departure from public service.” This
purpose is reflected in the “enterprise” and “aims” referenced in the standard of care prescribed by
§ 51.1-124.30.2° Moreover, by limiting the permissible uses of funds to “benefits, refunds, and
administrative expenses,” the Virginia Constitution evinces that the Board is to administer the VRS only
with fiscal considerations in mind.*°

Because the purpose of the VRS is thus limited, other public policy concerns and initiatives
necessarily are beyond the scope of the Board’s authority and role as trustee.*' Accordingly, a general public

27 1976-77 Op. Va. Att’y Gen. 225, 226.

28 See VA. CONST. art. X, § 11; VA. CODE ANN. § 51.1-124.1; Lindsey v. Gillmer, 188 Va. 1, 18 (1948) (Hudgins,
J., concurring) (explaining that VRS funds are held and invested for a distinct purpose: “to guarantee social security
to teachers and other State employees”).

29 “The purpose underlying a statute’s enactment is particularly significant in construing it[,]” 1998 Op. Va. Att’y
Gen. 9, 10 (citing VEPCO v. Bd. of Cnty. Supvrs., 226 Va. 382, 388 (1983)); and “[w]e are required to give to the
statute a reasonable construction—one which will, if possible, give effect to its obvious purpose.” S. Ry. Co. v.
Commonwealth, 205 Va. 114, 119 (1964) (quoting Norfolk S. Ry. Co. v. Lassiter, 193 Va. 360, 364 (1952)).

30 VA, CONST. art. X, § 11; see VA. CODE ANN. § 51.1-124.1 (establishing the VRS “for the purposes of providing
adequate benefits and pensions to members, encouraging stable employer contribution rates, and ensuring the overall
soundness of the Retirement System”); §§ 51.1-152 to -169 (2020 & Supp. 2023) (describing calculation of benefits).
Cf Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409, 420-21 (2014) (explaining that under ERISA, “the term
‘benefits’ . . . must be understood to refer to the sort of financial benefits (such as retirement income) that trustees
who manage investments typically seek to secure for the trust’s beneficiaries[; t]he term does not cover nonpecuniary
benefits .. . .” (citation omitted)).

Moreover, when applying the constitutional and statutory language, courts “consider ‘the evil sought to be
corrected by the legislature’ when it adopted the pertinent language.” GEICO Advantage Ins. Co. v. Miles, 301 Va.
448, 455 (2022) (quoting S. Ry. Co., 205 Va. at 117). The language limiting fund usage was added to the Constitution
as part of a recommended VRS reform initiative in the 1990s. As originally adopted in 1971, Article X, § 11 contained
only the following language: “The General Assembly shall maintain a state employees retirement system to be
administered in the best interest of the beneficiaries thereof and subject to such restrictions or conditions as may be
prescribed by the General Assembly.” Effective January 1, 1997, the provision was amended to its current version
after a majority of voters assented to a referendum presenting the question, “Shall the Constitution of Virginia be
amended to provide that the funds in the governmental employees retirement system shall be trust funds and be
invested and administered solely in the interests of the members and beneficiaries of the system?” See 1996 Va. Acts
ch. 4. Although the General Assembly retained some power over the administration of the VRS, the amendment not
only maintained the prescribed duty of loyalty, but also enshrined the limitation on the use of funds. Jd. The
constitutional amendments, as well as additional statutory amendments, to the VRS were adopted in response to
recommendations made by the Joint Legislative Audit and Review Commission in a 1994 report; the General
Assembly commissioned the report because “concerns ha[d] been raised about the independence of the Virginia
Retirement System and about the soundness of investments made on its behalf[.]” 1993 H.J. Res. 392. Among the
concerns was the appearance of undue influence of political considerations. See JOINT LEGISLATIVE AUDIT & REVIEW
COMMISSION, REVIEW OF THE VIRGINIA RETIREMENT SYSTEM, House Doc. No. 52, at iii, 2, 15, 19, 23, 25 & 56 (1994),
https://rga.lis. virginia.gov/Published/1994/HD52/PDF.

31 See 1990 Op. Va. Att’y Gen. 1, 5-6 nn. 2 & 4 (noting that an executive order directing that state agencies divest
from companies invested in South Africa did not alter the VRS Board’s scope of investment authority or fiduciary

duty).

Honorable Nicholas J. Freitas
August 16, 2024
Page 5

benefit, no matter how salutary, is insufficient to warrant investment by the VRS Board.* Rather, as this
Office previously has explained, potential VRS transactions are to be evaluated “solely on the basis of
[their] benefits to the retirement system beneficiaries, under the fiduciary standard in § [51.1-124.30].”

When a constitutional provision or statute confers a specific grant of authority, the authority exists
only to the extent specifically granted by the law. Because this principle applies to action by the VRS
Board,° I conclude that the Board’s investment authority must be exercised in the expressly established
manner, and no other.° Consequently, the fiduciary duties imposed on the Board under Virginia law direct
that the Board make its investment decisions based on securing the best financial results for VRS
beneficiaries and not in furtherance of environmental, social, and/or corporate governance policy goals.’

Conclusion

Accordingly, it is my opinion that the VRS Board is subject to fiduciary duties that preclude it from
basing its investment decisions on ESG policies rather than financial considerations.

With kindest regards, I am,

Very truly yours,

Cam:

Jason S. Miyares
Attorney General

32 1992 Op. Va. Att’y Gen. 138, 141 (“A toll road may have a valid public transportation purpose that would justify
direct expenditure by the General Assembly or some other public body, but such a purpose alone is insufficient to
justify the VRS Board’s investment of retirement system funds.”).

33 Jd. at 142. I note that federal law, ERISA, imposes similar, but not identical, fiduciary duties with respect to
private sector pension funds. See 29 U.S.C. §§ 1101 to 1114; 29 C.F.R. § 2550.404a-1a.

34 1997 Op. Va. Att’y Gen. 101, 103 (citing Tate v. Ogg, 170 Va. 95, 103 (1938)); accord 1999 Op. Va. Att’y Gen.
44, 45 (citing 2A NORMAN J. SINGER, SUTHERLAND STATUTORY CONSTRUCTION, § 47.23 (Sth ed. 1992 & Supp.
1999)).

35 See 2002 Op. Va. Att’y Gen. 233 (concluding, based on a lack of statutory authority, that the VRS could not
undertake certain actions).

36 See, e.g., Evelyn v. Commonwealth, 46 Va. App. 618, 634 (2005) (“When a legislative enactment limits the
manner in which something may be done, the enactment also evinces the intent that it shall not be done another way.”
(quoting Grigg v. Commonwealth, 224 Va. 356, 364 (1982))); 1980-81 Op. Va. Att’y Gen. 209, 210 (“A statute,
limiting things to be done in a particular manner, implies that it shall not be done otherwise.”).

37 Attorneys General of States with similar pension fund fiduciary provisions have reached the same conclusion.
See 2022 Op. Ky. Att’y Gen. 22-05; 2022 Op. Ind. Att’y Gen. No. 3.