Rokita: No ‘wake-up’ criteria allowed in retirement investments

Indiana and its investment managers cannot invest in the government employee retirement system based on environmental, social or governance criteria, Attorney General Todd Rokita wrote in an advisory opinion released Thursday.

Under state law, Rokita said, those decisions can only consider the financial interests of Indiana employees and retirees.

“Woke big business is collaborating with their leftist allies to overthrow the will of the people,” Rokita said during a virtual press conference on Thursday. “This includes investing Hoosiers pensions in ways that work against the best interests of Indiana families.”

The so-called ESG framework seeks to use specific criteria – rather than general terms – to assess the environmental impacts of a particular company or investment, human rights policies and governance structures. But the framework has drawn ire from conservatives who say it promotes a ‘woke’ agenda.

“For example, ESG investors make conscious decisions not to invest in fossil fuel companies, regardless of the prospects for financial return, simply because investors are more determined to fight against what they think is global climate change than bringing savers back,” Rokita says. “Other ESG goals include implementing critical race theory in corporate training programs.”

In the advisory opinionit concluded that Indiana law prevents the board of directors of the Indiana Public Retirement System from selecting investments based on ESG criteria, voting based on the criteria, and retaining investment advisers who use ESG criteria. criteria.

State Sen. Eric Koch, R-Bedford, sought advice from Rokita, who is the attorney for the Legislative Assembly.

But Rokita refrained from criticizing the 501,000-member system’s board itself. The pension system ended fiscal 2021 with about $45.8 billion in assets, according to its website.

Instead, he criticized companies hired to manage Indiana’s retirement investments.

“I want to be clear, the [system] the members of the board of directors … have worked hard to serve the best interests of Hoosiers,” Rokita said. “And we are grateful to them for that, but more and more actions by outside investment firms – the ones they are most often forced to deal with – threaten to ultimately erode that financial stability.”

“The increase in ESG investing has started to negatively impact public pension funds across the country. I don’t want that to happen here in the state of Indiana,” Rokita said later. His office did not immediately respond to a request for examples.

Rokita said his office was working with Arizona to review major investment management players like BlackRock, The Vanguard Group and State Street Corp., as well as with Missouri to review financial services firm Morningstar Inc.

Indiana joined Missouri on Thursday in another investigation into the Net-Zero Banking Alliance, launched in April 2021. The industry-led group of banks convened by the United Nations wants to reduce emissions from loan and debt portfolios. member investment to net zero by 2050.

Rokita spoke at an event streamed live via Facebook. His office asked both accredited reporters and regular Hoosiers to email written questions before and during the event, which a spokeswoman read aloud to Rokita.

Jon J. Epps