Indiana and its investment managers can’t make government employee pension system investments 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 take Indiana employees and retirees’ financial interests into account.
“Woke big businesses are collaborating with their leftist allies to subvert the will of the people,” Rokita said in a virtual event Thursday. “This includes investing Hoosiers’ pensions in ways that work against the best interest of Indiana families.”
So-called ESG framework seeks to use specific criteria — rather than general terms — to evaluate a company’s or a particular investment’s environmental impacts, 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 deliberate decisions not to invest in any fossil fuel companies, regardless of prospects for financial investment return, simply because investors are more committed to battling what they think is global climate change, than to making a return to savers,” Rokita said. “Other ESG goals include implementing critical race theory in corporate training programs.”
In the advisory opinion, he concluded that Indiana law blocks the Indiana Public Retirement System’s board from choosing investments based on ESG criteria, from voting based on the criteria and from retaining investment advisors that use the criteria.
State Sen. Eric Koch, R-Bedford, requested the opinion and Rokita acts as the legislature’s attorney.
But he stopped short of criticizing the 501,000-member system’s board itself. The pension system ended fiscal year 2021 with about $45.8 billion in assets, according to its website.
Instead, he criticized the firms hired to manage Indiana’s pension investments.
“I want to be clear, the [system] board members … have steadily worked hard to serve the best interests of Hoosiers. And we’re grateful for them, but increasingly actions by outside investment firms — those that they are, more often than not, forced to deal with — … threaten to ultimately erode this financial stability.”
“The increase of ESG investing has begun to negatively negatively affect state pension funds across the nation. I don’t want that to happen here in the state of Indiana,” Rokita said later. His office didn’t immediately respond to a request for examples.
Rokita said his office was working with Arizona to examine major investment management players like BlackRock, The Vanguard Group and State Street Corp., as well as with Missouri to look at financial services company Morningstar, Inc.
Indiana on Thursday joined Missouri in another investigation of the Net-Zero Banking Alliance, launched in April 2021. The United Nations-convened, industry-led group of banks wants to cut emissions from members’ lending and investment portfolios to net zero by 2050.
Rokita talks abortions
Rokita also said Thursday he would “proudly” defend Indiana’s abortion ban, set to go into effect September 15, from a legal challenge filed Tuesday by a group of Indiana abortion providers.
Rokita said he personally believes Senate Enrolled Act 1 should have “no exceptions” — it has four narrowly defined ones — but said his job is to “defend what whatever the Legislature passes.”
A nearly 50-day investigation into Indiana obstetrician-gynecologist Dr. Caitlin Bernard, who provided an abortion to a 10-year-old rape victim from Ohio — is ongoing, Rokita said. His office says it’s investigating whether Bernard violated reporting and patient privacy laws.
Bernard’s employer, Indiana University Health, told the Indianapolis Star in July that it found no privacy law violations in its internal review of the case. And the Indiana Department of Health released a terminated pregnancy report that appeared to clear Bernard on the reporting issue.
Asked why the investigation hadn’t yet concluded, Rokita said, “We’re gonna go where the facts take us, like we take all our investigations.”
“The speed at which it’s concluded is really going to be determined by the cooperation we get, not only from the subjects, but also third parties that are involved and [that] we need information from,” he added.
Rokita spoke in an event live-streamed through Facebook. His office required both credentialed journalists and everyday Hoosiers email written questions before and during the event, which a spokeswoman read aloud to Rokita.