Kansas legislature considers proposals to restrict ESG considerations in public pensions (2023)
| Environmental, social, and corporate governance |
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Kansas state lawmakers have been trying to develop a bill restricting ESG considerations in public pensions. In an effort to slow or amend such legislation, some businesses and others cited a report suggesting that banning ESG could hurt Kansas public pensioners:
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Conservative Republicans who want to thwart socially and environmentally conscious investing are now being pushed to water down their proposals after backlash from powerful business groups and fears that state pension systems could see huge losses. In both Kansas and Indiana, where the GOP has legislative supermajorities, bankers associations and state chambers of commerce criticized the strongest versions of anti-ESG legislation currently under consideration as anti-free market. In Kansas, their opposition prompted a Senate committee’s chair to drop the toughest version of its bill — applying anti-ESG rules to firms handling private investments — before hearings began this week. He also canceled a Thursday discussion of a milder version of an anti-ESG bill after the head of the state pension system for teachers and government workers warned that it could see $3.6 billion in losses over 10 years if the bill were passed…. “This is the underlying political nature of this,” said Bryan McGannon, acting CEO and managing director for US SIF: The Forum for Responsible and Sustainable Investment. “They really aren’t thinking about the consequences of the kind of the real world impacts of what this means in the financial system.” About one-eighth of U.S. assets being professionally managed, or $8.4 trillion, are being managed in line with ESG principles, according a report in December from US SIF, which promotes sustainable investing. At least seven states, including Oklahoma, Texas and West Virginia, have enacted anti-ESG laws in the past two years. GOP Govs. Ron DeSantis of Florida and Greg Gianforte of Montana also have moved to ensure their states’ funds aren’t invested using ESG principles.[1] |
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Discussions about the responsibilities of managers handling private investments are also slowing ESG opposition efforts in Kansas:
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Republican lawmakers pushing to prevent Kansas from investing its funds using socially and environmentally conscious principles disagree about also imposing rules for investment managers handling private funds, complicating their efforts to thwart what they see as “woke” investing. Committees in the Kansas House and Senate this week approved competing versions of anti-ESG legislation, and the two chambers could debate them as early as next week. ESG stands for environmental, social and governance and those considerations have become more prominent in investing in recent years, sparking a nationwide backlash from conservative Republicans. The Kansas Senate’s version of the anti-ESG measure would require private money managers to get their clients’ written consent before investing their funds along ESG principles. The House bill contains no such provision. The issue of requiring managers of private funds to disclose their ESG activities to clients or to get clients’ verbal or written consent to use them appears to be the last major sticking point among Republicans in the GOP-controlled Legislature. They’ve already backed off the toughest version of the anti-ESG legislation because of opposition from powerful business groups, and have rewritten both bills to prevent projected investment losses of $3.6 billion over 10 years for the pension fund for Kansas teachers and government workers.[1] |
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See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
Footnotes
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