Democratic Gov. Roy Cooper vetoed a Republican-led bill in North Carolina that would block state entities from considering ESG factors when making investment and employment decisions.
"This bill does exactly what it claims to stop," Mr. Cooper said in a statement June 23. "For political reasons only, it unnecessarily limits the treasurer's ability to make decisions based on the best interest of state retirees and the fiscal health of the retirement fund."
The bill, which passed the state Legislature on June 13, states that the North Carolina treasurer can only evaluate investments based on "pecuniary factors," or factors with a material impact on an investment's financial risk and return. The treasurer serves as the sole trustee of the $113.3 billion North Carolina Retirement Systems, Raleigh.
In addition, the bill would block state entities from considering ESG factors when making decisions related to hiring, firing or evaluating employees, and awarding state contracts.
In a Monday statement, North Carolina Treasurer Dale R. Folwell called on state lawmakers to override the veto.
"The legislature correctly passed a new law that protects retirees' money from being used for Wall Street's wacktivist political agenda," Mr. Folwell said. "This issue not only affects the pension plans, but also local budgets and the Banking Commission which I chair. As keepers of the public purse we are protecting and defending the state's money from this politicization."
Mr. Folwell, who recently announced his run as a GOP candidate in the 2024 governor's race, previously called for the resignation of BlackRock CEO Larry Fink, describing the executive's focus on ESG as "wacktivism."
On Sunday, Mr. Fink said at the Aspen Ideas Festival that he no longer uses the term ESG, stating the term has been "unfortunately politicized and weaponized."
North Carolina is just one of several states that have passed legislation to restrict the use of ESG criteria when making investment decisions. On a national level, House Republicans have formed an ESG working group to combat the movement.
The North Carolina House is set to vote on a veto override of the bill Tuesday afternoon, and vote counts suggest the Republican-led Legislature could be successful.
