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Investing

Some states target contracting with BDS, but avoid pension fund investing requirements

Former Wisconsin Gov. Scott Walker signed legislation in 2018 that prohibit state agencies from contracting with companies the boycott or sanction Israel.

Although some states have laws that directly affect public pension plans, some state actions can produce a split regarding boycott, divestment and sanctions activities in which prohibitions are enacted for state contracting but not for pension plan investing.

For example, in October 2017, Maryland Gov. Lawrence Hogan signed an executive order prohibiting executive branch agencies from signing contracts with businesses or organizations that support BDS actions. He also asked the trustees of the Maryland State Retirement and Pension System to divest from companies that support the BDS movement.

“The system is not engaged in divestment activities in connection with the BDS movement,” said Michael Golden, director of external affairs for the $52.6 billion Maryland State Retirement and Pension System, Baltimore.

In Pennsylvania, Gov. Tom Wolf signed into law in November 2016 a prohibition against state agencies contracting with “any company or organizations that engages in an economic boycott of Israel.”

The law doesn't apply to public pension plan investing, meaning that the $29.8 billion Pennsylvania State Employees' Retirement System, Harrisburg, follows the contracting law, said spokeswoman Pamela Hile. However, the pension system “does not have a social investing policy,” she said.

In April 2018, then-Gov. Scott Walker signed a law preventing any Wisconsin state agency or “local governmental unit” of the state from contracting with companies that seek to “penalize, inflict economic harm on or limit commercial relations with Israel or in a territory under Israeli jurisdiction.”

But the law doesn't affect investments by the $118.5 billion State of Wisconsin Investment Board, Madison, said Vicki Hearing, a spokeswoman for the board.

“We do not have other rules regarding the BDS movement,” she said. “SWIB seeks to mitigate risks of its investments in a manner that responsibly promotes and protects its long-term economic interests.” SWIB incorporates ESG and other factors into its investment process to optimize understanding of companies' long-term growth and risk.”