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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowIndiana and its investment managers can’t make government employee pension system investments based on environmental, social or governance criteria, Attorney General Todd Rokita wrote in an advisory opinion released Thursday.
Under state law, Rokita said, those decisions can only take the financial interests of Indiana employees and retirees into account.
“Woke big businesses are collaborating with their leftist allies to subvert the will of the people,” Rokita said during a virtual press conference Thursday. “This includes investing Hoosiers’ pensions in ways that work against the best interest of Indiana families.”
So-called ESG framework seeks to use specific criteria — rather than general terms — to evaluate a company’s or a particular investment’s environmental impacts, human rights policies and governance structures. But the framework has drawn ire from conservatives who say it promotes a “woke” agenda.
“For example, ESG investors make deliberate decisions not to invest in any fossil fuel companies, regardless of prospects for financial investment return, simply because investors are more committed to battling what they think is global climate change than to making a return to savers,” Rokita said. “Other ESG goals include implementing critical race theory in corporate training programs.”
In the advisory opinion, he concluded that Indiana law blocks the Indiana Public Retirement System’s board from choosing investments based on ESG criteria, from voting based on the criteria and from retaining investment advisers that use the criteria.
State Sen. Eric Koch, R-Bedford, requested the opinion from Rokita, who serves as the Legislature’s attorney.
But Rokita stopped short of criticizing the 501,000-member system’s board itself. The pension system ended fiscal year 2021 with about $45.8 billion in assets, according to its website.
Instead, he criticized the firms hired to manage Indiana’s pension investments.
“I want to be clear, the [system] board members … have steadily worked hard to serve the best interests of Hoosiers,” Rokita said. “And we’re grateful for them, but increasingly actions by outside investment firms — those that they are, more often than not, forced to deal with — threaten to ultimately erode this financial stability.”
“The increase of ESG investing has begun to negatively affect state pension funds across the nation. I don’t want that to happen here in the state of Indiana,” Rokita said later. His office didn’t immediately respond to a request for examples.
Rokita said his office was working with Arizona to examine major investment management players like BlackRock, The Vanguard Group and State Street Corp., as well as with Missouri to look at financial services company Morningstar Inc.
Indiana on Thursday joined Missouri in another investigation of the Net-Zero Banking Alliance, launched in April 2021. The United Nations-convened, industry-led group of banks wants to cut emissions from members’ lending and investment portfolios to net zero by 2050.
Rokita spoke in an event livestreamed through Facebook. His office required both credentialed journalists and everyday Hoosiers to email written questions before and during the event, which a spokeswoman read aloud to Rokita.
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