Provided by Hannah News Service
The Senate Wednesday passed a bill maintaining that state investments will not prioritize environmental, social, or corporate governance policies (ESG).
Sen. Kirk Schuring (R-Canton) argued his SB6 (Schuring) that addresses ESG in investment policies by state retirement systems, institutions of higher education, and the Bureau of Workers’ Compensation (BWC) simply states that those investments must be paramount to the best benefit of the beneficiaries of those investments. He said there is nothing in the bill that speaks to disinvestment, and if a private sector entity wants to make investments based on ESG, they can. He noted that all five public retirement systems support the bill.
Schuring added that the bill is not what has been introduced in other states specifically barring investments in ESG, adding it is a “carefully crafted bill.”
Sen. Vernon Sykes (D-Akron) opposed the bill, saying he does in “deep reflection.” He noted that when he first came to the Legislature, he supported efforts to disinvest in apartheid South Africa, and had received calls from constituents worried that it would affect their pensions.
He said the Legislature should be reluctant to require or prevent any type of investments, saying shareholders do not have permanent friends or permanent enemies, they just have permanent interests in their investments.
Sykes said he doesn’t think ESG should be the sole factor in a decision in investments, nor should it be the primary factor, but he said it should still be an option as long as it is prudent and it maximizes the interests and investments and minimizes risks.
“Ohio doesn’t have an ESG problem,” Sykes said, adding that the pensions are currently managed fairly.
Sen. Louis Blessing (R-Cincinnati) said he has concerns that the bill may cause some unintended consequences but he still supports it. He said that lawmakers are treating the symptom not the root cause of the problem, and said the federal level needs to step in and require some form of antitrust compliance with firms that hold a large market share through their mutual funds and use that power to push ESG policies on companies.
Sen. Kent Smith (D-Euclid) argued the bill could cause confusion and prevent pension funds from making the best possible investments. He also said that the bill is removing morality from investment decisions.
Sen. Jerry Cirino (R-Kirtland) said the bill is about protecting current and future retirees in state pension systems, and the best way to do that is to have the sole focus on the return on investment. He said so many states are behind in their pension obligations and “have taken their eyes off the ball in many respects.”
Cirino also cited the lost investment by the State Teachers Retirement System (STRS) in Silicon Valley Bank, which collapsed earlier this year, saying that bank was famous for its ESG focus. “We know bad decisions are being made in the state of Ohio.”
Sen. Bob Hackett (R-London) argued that ESG-based funds never out-earn other mutual funds, and all the bill says is that they should not be the priority of investments.
The bill passed on a straight-party line vote of 26 to 7.