(The Center Square) – Government hiring and financial decisions will be based on merit, rather than climate change or social issues, with legislation that gained final approval from lawmakers on Tuesday.
Members of the Senate voted 29-18 to approve House Bill 750 to ban environmental, social and governance policies – a grouping that has gained the shorthand acronym ESG – in state hiring and financial matters. The legislation now heads to Democratic Gov. Roy Cooper, who has pushed a green agenda inclusive of wind and electric energy.
The bill moved quickly through Senate committees last week, following a 76-41 vote in the House on the eve of crossover. Democrats are aligned with the governor.
Cooper has not weighed in on the legislation, but vote totals in both chambers suggest a veto could be swiftly overridden. So far in 2023, at least 25 states have considered and eight have enacted similar legislation.
Eighteen states have considered bills to restrict ESG factors in state investment decisions, while 13 have considered measures to prevent discrimination against the fossil fuel industry. Three states have introduced bills that would do both, according to LexisNexis.
On the other end, 10 states are considering bills to promote environmental, social and governance considerations against the fossil fuel and firearm industries, as well as private prisons, though none have been enacted.
The environmental, social and governance initiatives, which screen investments based on how companies address climate change and other social issues, have drawn fierce backlash from conservatives who oppose the forced transition in energy sources and the social policies promoted.
Republicans say the intent of HB750 is to ensure hiring and financial decisions are in the best interests of taxpayers and pensioners, rather than unrelated factors. It ensures state agencies and political subdivisions base employment decisions and contracts on merit, instead of ideology.
Treasurer Dale Folwell, a Republican candidate for governor who has criticized ESG policies as “wacktivism,” put his support behind SB750 last week. Folwell manages the ninth largest public pension in the country at $113.7 billion, and the legislation would ensure investments are centered solely on pecuniary interests.
“People want their government to work,” Folwell said. “This bill is the perfect example of how elected leaders can get together and make good policy so that future treasurers will not be able to use beneficiaries’ money to promote a political agenda.”
Folwell has repeatedly called for the resignation of BlackRock CEO Larry Fink for leveraging the firm’s financial power to push “net zero” carbon goals that conflict with fiduciary responsibilities.
North Carolina Retirement Systems, which provides retirement benefits and savings to more than 1 million North Carolinians, invests about $14 billion through BlackRock in mostly passive funds and about $55 million in BlackRock stocks and bonds.
A BlackRock proxy voting system called Voting Choice allows the firm to leverage the ability to vote proxy shares to promote environmental, social and governance policies, but Folwell secured an agreement that enables the state to vote its shares managed by BlackRock.
“As fiduciaries, we need to be singularly focused on financial returns for our members,” Folwell said.
