North Carolina Bans Political “ESG Investors” From Managing State Pensions
- BY Sarah Coffey
Would you be willing to risk your pension to further someone else’s political agenda? Probably not. But under environmental, social, and governance (ESG) investing criteria, that’s what happens.
When North Carolina’s public workers save for retirement, they should have peace of mind knowing that those put in charge of investing on their behalf are choosing the best return on investment—not the most radical.
Luckily the public servants of North Carolina need not worry any longer, because lawmakers just passed a bill banning financial institutions from investing public funds using ESG investing criteria in the Tar Heel State.
ESG in state pensions is now banned in North Carolina
Lawmakers in the General Assembly recently sent legislation to the governor’s desk to stop state pension money from being invested using ESG criteria. Gov. Roy Cooper vetoed the bill, but given its overwhelming support by the General Assembly, his veto was overridden and the bill became law.
ESG criteria favors companies that promote far-Left ideas, such as participating in an economic boycott of the fossil fuel industry, diversity and inclusion, gender ideology, and more—even if their financial performance lags behind other funds. It’s a virtue-signaling scorecard for politically motivated investing.
Many Leftist investors have fallen for the marketing scheme of ESG investing and opted into these funds voluntarily, at their own financial expense. But that’s not what’s happening here.
Public pensioners don’t get to decide how investment decisions are made for their pension—a financial institution contracted by the state does. And North Carolina has been in contracts with notorious leaders in the ESG movement, like BlackRock.
BlackRock currently manages $14 billion of investments from the North Carolina Retirement System. Its CEO, Larry Fink, has become one of the loudest advocates of ESG investing.
North Carolina has been unhappy with BlackRock for a while. Last year, State Treasurer Dale Folwell sent a letter to Larry Fink, calling on him to resign or be removed due to his foolish support for ESG.
He wrote, “Mr. Fink’s political agenda has gotten in the way of his same fiduciary duty. A focus on ESG is not a focus on returns, and potentially could force us to violate our own fiduciary duty of loyalty.”
“Ultimately, Mr. Fink’s continued ideological pressure could result in using ESG scores against states and local governments, lowering their credit ratings and thus driving up their cost of borrowing at taxpayers’ expense. This not only concerns me as the state treasurer and ‘keeper of the public purse,’ but as Chair of the N.C. State Banking Commission and the Local Government Commission.”
State pension investments shouldn’t be made with a political agenda
North Carolina has a simple job here: Maximize returns for its public pension funds. To do this, it must select investments with the best financial performance, not the most politically driven mission statements.
In banning ESG criteria from state investment decisions, North Carolina will become a national leader alongside a handful of other states in keeping politics out of the pensions of public employees.
In 2022, Missouri withdrew half a billion dollars of employee retirement funds from BlackRock-managed investments. Last year, Florida acted to remove ESG criteria from state investment decisions.
The state treasurer of South Carolina declared it will divest $200 million—the entirety—of its BlackRock holdings because the firm is loudly anti-fossil fuel. Lawmakers are also considering legislation to require state retirement investments to be made only using factors that impact risk and return.
Oklahoma legislators introduced a bill to prevent companies engaged in energy boycotts from entering state contracts, and protect retired Oklahomans from politically motivated investing. West Virginia will also be firing BlackRock.
“If you don’t want to do business with our industries, we are not going to do business with you,” said West Virginia treasurer Riley Moore.
Thanks to lawmakers in Raleigh, North Carolina won’t have to, either.
For further reading on ESG…
Our Issues: Fighting the ESG Agenda
One-pager: What is ESG?