Kentucky Gov. Andy Beshear, a Democrat, has signed into law a measure that requires the state’s public pension funds to make investment decisions on financial risks and returns, rather than environmental, social, and governance (ESG) factors.
It bans actions on “nonpecuniary interests,” including “environmental, social, political, or ideological interest” without a connection to the financial performance of an asset.
State Treasurer Allison Ball, a Republican, touted the new law.
“For many years, pension investments were about maximizing returns. Recently, however, there has been a destructive shift in investment methodology to use the savings of Americans as financial muscle to push ideological causes through the ESG movement.
“Kentucky has said no to this shift by passing HB 236, which clarifies that pension fiduciaries must base investment decisions solely on financial metrics, not politics.”
The state’s House passed the legislation 77–17 on March 2, and the state’s Senate approved it on March 13 on a 32–5 vote. Republicans hold supermajorities in both chambers of the state legislature.
“With the ESG movement infiltrating businesses and threatening Americans’ finances, it’s now more important than ever to ensure that asset managers are following through with their fiduciary responsibilities,” said Jessica Anderson, the group’s executive director. “As the first bill of its kind to be enacted, HB 236 will require asset managers to prioritize the investment returns and financial interests of Kentuckians.
“This is a historic victory for Kentucky and will be an example for other states to follow as they look to protect their state industries, investments, and workers.
“We look forward to even more states across the country adopting this approach and taking additional steps to rid our states of ‘woke’ finance.”
Ball was in Washington on March 9 to take part in a bill-signing ceremony held by House Speaker Kevin McCarthy (R-Calif.), who signed a resolution introduced by Rep. Andy Barr (R-Ky.) that would block a Labor Department rule that allows pension fund managers to consider ESG factors in investment decisions.
“We don’t need to push ideological agendas. We don’t need to push anything that is progressive. We need to focus on getting good returns so people can retire at the end of their work life.”
“He believes political agendas are more important than returns. In reality, ESG funds have underperformed the broader market over the past 5 years. Retirements are about returns, not politics,” she wrote.