INDIANAPOLIS (WISH) – The state’s top finance official said Friday that a new investment law won’t limit Indiana’s investment options.
Indiana’s Republican-dominated Legislature passed a law this spring to ban the state retirement system from working with investment managers who engage in so-called ESG investments. This 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 was signed by Gov. Eric Holcomb directs the state treasurer to review the public filings of mutual fund managers with which the state’s Employees’ Retirement System operates. If any entity has expressed a commitment to ESG investment, the state must stop doing business with that investor if it can find another investor that offers the same services.
State Treasurer Daniel Elliott told News 8 the new law only deals with decisions made by mutual fund managers, not individual corporations. As an example, he said that Apple’s environmental goals would not cause the state to divest itself of that particular company.
“We’re going to look at the policies that have been publicly stated by any of these investment fund managers, we’re going to look at any official statement, we’re going to look at any particular publicly created statement, as well as any public initiative that they’re a part of,” he said. “Everything, in my opinion, has 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 the Immigration and Customs 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 the adoption of renewable energy, he said the state would invest elsewhere because those companies will no longer guarantee the highest possible profitability.
Previous 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 largely rewritten from the original House proposal, does not have a cost estimate. Elliott said the large number of investment fund managers means the state is unlikely to run out of investment options if it stops doing business with some ESG commitments.
When asked if the new law meant lawmakers interfered with the free market, Elliott said, “What’s happened is you’ve had a lot of corporations and some people in particular with a certain political ideology, they’ve put their thumb on the ‘scale. What this law does is it takes anyone’s thumbs off the scale and says we have to simply focus on what is in the best financial interest of our pensioners.’
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