ucky AG Daniel Cameron: Prioritizing ESG Investments is ‘Inconsistent with Law //

Kentucky Attorney General Daniel Cameron warned previously that state pension funds cannot legally make social, governance, and environmental considerations when they invest the dollars of public employees.

Cameron and Allison Ball, both Republicans elected to the state treasurer position, asked two state pension system to show that they are primarily focused upon return on investment in decisions about where state employee money goes.

“Recently Treasurer Ball asked the Office of the Attorney General if environmental, social and governance (ESG), investment practices that introduce mixed motivations into investment decisions are consistent with Kentucky law regarding fiduciary obligations owed investment managers to Kentucky public pensions,” the Oct. 31 correspondence from Cameron and Ball states. “The Attorney General stated that such practices are in violation of contractual and statutory fiduciary obligations.”

The letter was addressed to David L. Eager (executive director of the Kentucky Public Pensions Authority, which manages $38.07 Billion in retirement assets) and Gary L. Harbin (executive secretary of the Kentucky Teachers’ Retirement System, which manages 228 billion).

“We are writing to you today to ask that you, as the executive directors for the Commonwealth’s major public retirement systems, inform our Offices of your systems’ efforts in order to ensure that ESG considerations do not influence your investment decisions, consistent Kentucky law,” the letter continues.

The letter gave the pension directors until Nov. 23 to reply. Eager explained to The Daily Signal that the deadline was extended to December 1, after the respective boards for trustees for the pensions met.

Eager said in a telephone interview that “that is a decision board will make, and not the executive director.”

Eager stated that the teachers pension board and the public pension board would meet on December 1.

A top official from the state’s Teachers Retirement System stated that it is not involved in ESG investment.

“TRS is happy respond to the recent mail from the AG/Treasurer as requested,” Beau Barnes (deputy executive secretary) stated in an email. “TRS is not a ESG investor. TRS’s investment policy makes asset protection and enhancement the goal of all investing. This is consistent with TRS’s fiduciary obligation under law. This fiduciary responsibility is to ensure that members receive the best returns while minimizing risk.

Cameron stated this in a public declaration this week: “Rising inflation means that protecting the retirement security for Kentucky’s public employees has become even more important.” This letter was sent to warn that prioritizing ESG-related investments over the financial interests investors is against Kentucky law.

Consumers’ Research, an organization that advocates against ESG investment in the private and public sectors, praised Cameron and Ball for taking this stand.

“The joint action by Treasurer Ball, Attorney General Cameron sends an unambiguous message to Kentucky’s pension funds investment managers: they are responsible for the pensioners, and not the Democratic Party, international groups or megalomaniacs such as Larry Fink,” Will Hild (executive director of Consumers’ Research) stated in a public statement. We applaud both officials for standing up to the citizens of Kentucky who are being crushed by reckless, illegal actions taken by companies like Vanguard, BlackRock and State Street, which put progressive politics above their legal or moral duties.”

In May , the Kentucky attorney general’s office issued a opinion stating that pension managers must invest based on the interests of beneficiaries and members.

“Politics has no place in Kentucky’s public pensions. Accordingly, the Office believes that’stakeholder capitalism and ‘environmental and social’ investment practices that bring mixed motivations to investment decisions are incompatible with Kentucky law that governs fiduciary duties owed to Kentucky’s public retirement plans.

According to the opinion, investment managers must be “unipolar in their motivations and actions. Their decisions must be solely in members’ and beneficiaries’ best interests.

Ball first sought the opinion of the attorney general.

“Kentuckians worked for decades to earn their pensions, and they rely on them for their livelihood in retirement. Ball stated in a public statement that it is crucial that their investments are maximized and not politicized. “As the watchdog for taxpayer dollars, I am committed to ensuring that funds are invested and used in accordance with the law.”

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