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Treasurer says ESG investing ban won’t tie down Indiana retirement fund

INDIANAPOLIS (WISH) — The state’s top financial officer on Friday said a new investing law won’t limit Indiana’s investment options.

Indiana’s Republican-dominated legislature this spring passed a law to prohibit the state retirement system from working with investment managers who engage in so-called ESG investing. That involves making investments based on various environmental and social factors. It has become a target of Republican lawmakers across the country.

The final version of the bill signed into law by Gov. Eric Holcomb directs the state treasurer to review any public statements by investment fund managers with which the state employee retirement system works. If any entities have indicated a commitment to ESG investing, the state must stop doing business with that investor if it can find another investor that provides the same services.

State Treasurer Daniel Elliott told News 8 the new law only deals with decisions made by investment fund managers, not individual corporations. As an example, he said Apple’s environmental goals would not cause the state to divest from that particular company.

“We will look at the policies that have been publicly stated by any of these investment fund managers, we will look at any official statements, we’re going to be looking at any particular publicly-created statements as well as any public initiatives they are part of,” he said. “Everything, in my mind, needs to be very transparent.”

The new law specifically directs Elliott to look for investment managers who intentionally divest from companies in industries such as fossil fuels, mining and firearms and ammunition, as well as companies that contract with Immigration and Customs Enforcement for migrant detention services. Elliott said the language does not tie the retirement system to those industries. If fossil fuels become less profitable due to adoption of renewable energy, he said the state would invest elsewhere because those companies would no longer guarantee the maximum possible return.

Earlier versions of the ESG ban were estimated to cost the state retirement system $6.7 billion over 10 years, a price tag that drew opposition from business groups. The final version signed into law, which was heavily rewritten from the House’s original proposal, has no cost estimate. Elliott said the sheer number of investment fund managers means the state is unlikely to run out of investment options if it stops doing business with some over ESG commitments.

Asked whether the new law amounts to lawmakers interfering with the free market, Elliott replied, “What has happened is you had a lot of corporations and some particular folks with a particular political ideology, they have put their thumb on the scale. What this law does is it removes anybody’s thumbs from the scale and says we’ve got to focus simply on what is in the best financial interest of our pensioners.”

“All INdiana Politics” airs at 9:30 a.m. Sundays on WISH-TV.