Rep. Scott Sharp’s House Bill 236 bans state retirement-system managers from making investment decisions based on environmental, social, governance (ESG) factors, which climate extremists are using to try and reduce available capital related to the investment and production of fossil fuels.

Sharp, an Ashland Republican, represents eastern Kentucky, where the coal industry has already born the brunt of Washington’s regulatory schemes aimed at creating obstacles to starting and expanding fossil fuels operations.

The LRC’s summary of his bill notes that it requires retirement-system fiduciaries “consider the sole interest of the members and beneficiaries of the retirement systems using only pecuniary factors and prohibit the consideration of or actions on nonpecuniary interests including environmental, social, political, and ideological interests.”

The bill, which passed the House by a 77-17 margin, was reported favorably by the Senate State and Local Government Committee and received a first reading yesterday.

The House’s version of the bill included an important committee substitute and floor amendment ensuring that proxies also are bound to vote strictly for investment practices that produce maximum financial returns rather than further their personal political ideology. We addressed the importance of including proxies in the scope of this policy in a recent BIPPS statewide column:

This requirement will prepare Kentucky to prevent the troublesome practice of proxies casting a vote based on ESG ideology only to then be allowed to hide behind the party they represent as having less-than-full fiduciary responsibility when returns are dismal.

Read the column here.