North Carolina’s legislature this week moved an ESG-themed investment bill to Democratic Gov. Roy Cooper’s desk.
The legislation features language similar to anti-ESG bills that have been considered or passed in numerous other states, such as limiting investment decisions to “pecuniary” factors. However, the ratified version of North Carolina’s bill contains a significant carve-out for ESG.
“Environmental or social considerations are pecuniary factors only if they present economic risks or opportunities that qualified investment professionals would treat as material economic considerations under generally accepted investment theories,” the revised bill read. “The weight given to those factors shall solely reflect a prudent assessment of their impact on risk and return.”
The original version of the bill would have given that discretion to the state treasurer, rather than asset managers. The edit hints at the challenge of passing legislation that could potentially limit ESG considerations for public assets in a state with a Democratic leader. Cooper isn't expected to sign the bill, according to local news reports. However, the votes in the House and Senate were substantial enough to override a veto, The North Carolina Journal reported.
The limitations approved by the state’s legislature are similar to those in ESG rules passed by the Department of Labor in the Trump administration. Although ESG considerations weren't banned outright — except for the qualified default investment options in retirement plans — there was a chilling effect associated with the rules, observers have said.
Still, the effect that the North Carolina bill could have on management of state assets may be more symbolic than practical. Asset managers overseeing pension fund money generally use ESG factors to improve risk and return analyses rather than put social or environmental goals ahead of financial performance.
Another aspect of the bill pertains to ESG use in personnel management by state agencies.
That component would prevent any state agency, political subdivision, trust, committee or commission from having the option to “use, enforce, provide data for use in, or otherwise participate in the creation or use of ESG or ETI policies related to hiring, firing, or evaluating employees,” according to the revised bill text.
IRAs now hold nearly twice the assets of 401(k) plans — and most of that money didn't arrive through annual contributions.
A new survey finds that many women prioritize financial security but continue to leave savings in accounts that may not keep pace with inflation.
Roundhill, Bitwise and GraniteShares funds remain on hold while the agency weighs how novel ETFs should be regulated.
"Shares of alternative assets managers have lagged this year as investors grow wary of private-credit exposure."
The fintech platform is touting a new AI-free Planning Observations feature, which draws on IRS tax records to uncover opportunities for advisors.
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
