The committee didn't vote on the Senate bill, which was introduced in early January by six Republicans.
The bill said investing taxpayer dollars "does not include any action taken, or factor considered, by a fiduciary with any purpose whatsoever to further social, political or ideological interests" beyond what is permitted by state or federal law. The proposal covers the pension system and any state unit that makes investments.
Prohibited interests include limiting investments or divesting from gun manufacturers; limiting investments or divesting from companies that don't meet environmental standards; and assessing corporate boards' governance policies on compensation, composition and employment. Other prohibited interests include reducing or disclosing greenhouse gas emissions and providing "access to abortion, sex or gender change or transgender surgery."
Karlon said the pension system's objection to the bill isn't specific to ESG. The system opposes mandates or prohibitions that interfere with its fiduciary duty, he said. "The only goal is to make prudent long-term investments," he said.
Karlon's testimony was similar to what he presented Jan. 30 to a House committee reviewing a bill that would make it a felony for anyone responsible for taxpayer money to knowingly make investments using ESG criteria in violation of the bill's definition of fiduciary duty.
The House Executive Departments and Administration Committee voted 13-0 to send the bill to the full House recommending rejection, or, in New Hampshire legislative parlance, deemed inexpedient to legislate.
Karlon said the pension system's legislative committee unanimously opposed the House bill.
He added that ESG is "never considered an end unto itself" by the pension system, and neither would any other nonpecuniary factor. The system evaluates many factors in reviewing how investments affect efforts to achieve the highest return for participants, he said.