North Carolina agencies and state pension plans would be prohibited from using socially and environmentally conscious criteria to make investment decisions or hire employees, under legislation that advanced Wednesday in the state Senate.
The proposal, which passed the GOP-controlled House last month with some bipartisan support, would ban the use of “environmental, social and governance” standards to screen potential investments based on the company’s perceived environmental or social impacts and how its leadership is structured to support those goals.
The bill advanced Wednesday through the Senate Pensions, Retirement and Aging Committee and must clear one more committee hurdle before it receives a floor vote for final approval.
An identical bill passed the Senate along party lines last month before legislative leaders opted to move forward with the House version, signaling legislative approval may be swift.
Sen. Brad Overcash, a Gaston County Republican and one of the bill’s primary sponsors, argued the state cannot afford to allow sustainability and diversity initiatives to interfere with its responsibility to support its residents.
“The fact is, we need to award state contracts, we need to hire, fire and evaluate people and businesses based on merit, based on ability,” Overcash said.
The legislative push in North Carolina comes after President Joe Biden’s administration asked a federal judge on Monday to toss out a lawsuit by GOP-led states over a rule allowing employee retirement plans to make socially conscious investment considerations.
At least two other states – North Dakota and Idaho – have enacted laws banning similar criteria.
North Carolina State Treasurer Dale Folwell, a Republican candidate for governor in 2024, supports the bill, said Sam Watts, a representative from Folwell’s office who oversees the state employee health plan.
The proposal, set to take effect as soon as it becomes law, would require the state treasurer to only consider factors expected to have a material effect on the financial risk or financial return when evaluating an investment.
Watts commended the bill for protecting North Carolinians’ retirement funds by banning the state from basing its partnerships on politics rather than finances.
“Our money in the treasurer’s office is not red or blue – it’s all green,” Watts said. “And we want more of it for retirees and taxpayers and to do things like pay for cost-of-living adjustments.”
Democratic Sen. Jay Chaudhuri of Wake County raised issue with a provision that also prohibits “economically targeted investments,” arguing that it isn’t clearly defined in the bill and seems “misplaced.”
“I am worried that we’re going to prohibit the treasurer’s office from creating these funds that can both have a successful rate of return as well as creating jobs,” Chaudhuri said.
Photo: North Carolina State Treasurer Dale Folwell (AP Photo/Phelan M. Ebenhack)
Topics North Carolina Politics
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