A bill to direct state investments away from financial services providers determined to be “discriminating” against the fossil fuel, firearm, or ammunition industries won final passage Monday in the Arkansas Legislature after concerns abated over the impact it could have on state retirement funds.
The measure, which now heads to Republican Gov. Sarah Huckabee Sanders, creates an ESG Oversight Committee to compile a list of those banks and other financial services providers for divestment purposes of state and local government-related investments.
“(This bill) makes a political statement we’re going to stand up for south Arkansas oil, we’re going to stand up for the gun manufacturers that have recently moved into this state,” Republican State Rep. Jeffrey Wardlaw, the bill’s sponsor, said on the House floor.
He pointed out amendments were made to the legislation at the request of state retirement systems.
The bill passed the House in February and was amended in the Senate before its March 13 passage in that chamber, forcing its return to the House.
Two Senate amendments, which include provisions exempting actions by investment advisers and divestments that would “cause a negative financial impact to the state,” fell short of passage on their first try in the House Monday, but succeeded on a second try.
State Rep. Les Warren, the House chair of the legislature’s Joint Committee on Public Retirement and Social Security Programs, initially spoke against the bill, saying it would harm retirement systems funded by the state and its employees.
“The fiduciary responsibility is to invest those commingled funds in a way that gets the best possible returns,” he said. “With this bill, the legislature will be telling the investment professionals what they can and cannot do.”
After a motion was made to reconsider votes on the Senate amendments, Warren said he would not vote against the bill, citing “extensive conversations” he had in the interim assuring him losses will be minimized.
State Rep. Julie Mayberry, a Republican, continued to raise an alarm, pointing to local media reporting on projected investment losses by state pension funds.
For example, Arkansas Public Employees Retirement System officials have warned of a potential loss of $30 million to $40 million per year under House Bill 1307, according to the Arkansas Democrat-Gazette.
Earlier this month in the Kansas Legislature, legislation targeting environmental, social, and governance criteria in public investments and contracts was stalled in committees due to projected big pension fund losses due to divestment.
After being amended to address concerns, House Bill 2436 passed the Kansas House Thursday in an 85-38 vote. An amended SB 291 passed the Senate Tuesday in a 29-11 vote.