Arkansas

Title

Key Dates

Nature of
Action

ESG Category

Summary

HB1845: To Amend The Law Concerning Environmental, Social Justice, Or Governance Scores

Effective date
8/1/2023

Adopted
4/12/2023

Introduced
4/3/2023

Legislation

Restrict Use of ESG Factors; Focus on Pecuniary Characteristics

■ Amends existing Arkansas statute to authorize the ESG Oversight Committee, as created by HB1307 below, to replace the State Treasurer in determining whether a financial service provider violates the state's ESG rules.

HB1307: Concerning The Regulation Of ESG Scores

Effective date
8/1/2023

Adopted
3/30/2023

Introduced
1/26/2023

Legislation

Restrict Use of ESG Factors; Focus on Pecuniary Characteristics

■ Authorizes the state treasurer to maintain a list of certain financial services providers and to divest certain investments or obligations due to the use of environmental, social justice, or governance-related metrics and discrimination against the energy, fossil fuel, firearms, or ammunition industries.

■ Requires the state treasurer's evaluation of an investment to be based only on pecuniary factors.

■ Creates the ESG Oversight Committee to determine a list of financial services providers that discriminate against energy, fossil fuel, firearms, or ammunition companies or otherwise refuse to deal with them based on ESG-related factors.

SUBSEQUENT DEVELOPMENTS:

On April 15, 2024, the ESG Oversight Committee identified the following financial services providers as discriminating against energy, fossil fuel, firearm, or ammunition companies or otherwise refusing to deal based on environmental, social justice, and other governance-related factors. The six financial service companies (including affiliates) are:

■ Credit Suisse Asset Management, Credit Suisse Group AG, Credit Suisse Securities LLC;

■ Goldman Sachs Asset Management, Goldman Sachs & Co., Goldman Sachs Group Inc.;

■ Nomura Asset Management, Nomura Group, Nomura Securities;

■ Royal Bank of Canada, Royal Bank of Canada Global Asset Management, RBC Capital Markets;

■ TD Asset Management, TD Bank Group, TD Securities;

■ UBS Group AG, UBS Asset Management, UBS Securities LLC, UBS Financial Services Inc.

The Committee gave written notice of their intent to place these six companies on a list of companies that are in violation of the statute. The companies have 30 days to respond. The Committee is scheduled to meet again on May 6, 2024, to evaluate any responses received from the six companies and then finalize the list.

Target Entities that Boycott Certain Industries

Prohibit Discrimination on Basis of Social Credit or ESG Scores

HB1253: To Create The State Government Employee Retirement Protection Act

Effective date
8/1/2023

Adopted
4/10/2023

Introduced
1/25/2023

Legislation

Restrict Use of ESG Factors; Focus on Pecuniary Characteristics

■ Requires a fiduciary to discharge its duties with respect to any state of Arkansas pension benefit plan solely in the pecuniary interest of the participants and beneficiaries. A fiduciary may not promote a non-pecuniary benefit or any other non-pecuniary goals.

■ An ESG consideration is a pecuniary factor only if it presents an economic risk or opportunity that a qualified investment professional would treat as a material economic consideration under generally accepted investment theories.

■ Requires all shares held directly or indirectly by or on behalf of a pension benefit plan or its beneficiaries or both to be voted solely in the pecuniary interest of the pension benefit plan participants. Prohibits voting to further a non-pecuniary or an ESG goal, unless no economically practicable alternative is available.

SB62: To Prohibit Public Entities From Contracting With Companies That Boycott Energy, Fossil Fuel, Firearms, and Ammunition Industries

Adopted and in effect
4/11/2023

Introduced
1/17/2023

Arkansas State Treasurer Yanks about $125M Out of Accounts Managed by BlackRock

Adopted and in effect
3/17/2022

Enforcement / Divestment

Restrict Use of ESG Factors; Focus on Pecuniary Characteristics

■ The state treasurer announced that Arkansas would divest $125 million from money market accounts managed by BlackRock. A spokeswoman for the treasurer stated that the divestment was due to what she claims was BlackRock "handpicking companies that aligned with their ESG beliefs and beliefs we feel most Arkansans are opposed to." The state treasury invests approximately $6 billion in state funds.

Title

Key Dates

Nature of
Action

ESG Category

Summary

 ■ Amends the definition of "discriminate" used for ESG scores or metrics to include the refusal to engage in the trade of goods or services, or the termination of an existing business relationship, with an entity based solely on its status as an agricultural producer.

■ Adds financial services providers that discriminate against agricultural producers to the list of financial services providers subject to written notice and publication on the Treasurer of State's website, as determined by the ESG Oversight Committee.

 ■ Prohibits financial institutions with assets over $100 billion from discriminating against agriculture producers based on their greenhouse gas emissions, use of fossil-fuel-derived fertilizer, or use of fossil-fuel-powered machinery.

■ Creates a rebuttable presumption that any denial or restriction of financial services to an agriculture producer is discriminatory if a financial institution has made an environmental, social, and governance (ESG) commitment.

■ Provides that violations of the act are considered violations of the Arkansas Civil Rights Act and the Deceptive Trade Practices Act, with enforcement coordinated by the Attorney General and the Secretary of the Department of Agriculture, who can impose civil penalties up to $10,000 per violation.

HB1443: To Create The Second Amendment Financial Privacy Act; To Prohibit Financial Institutions And Payment Networks From Using Certain Discriminatory Practices; And To Provide For Enforcement Of Violations.

Introduced
2/10/2025

Legislation

Target Entities that Boycott Certain Industries

■ Prohibits financial institutions from discriminating against a firearms retailer by taking any action against a customer or merchant that is intended to suppress lawful commerce involving firearms and related products based solely or in part on the customer's or merchant's business involving firearms and related products.
■ Allows the Attorney General to investigate alleged violations, provide written notice of violations, request an injunction against the use of a firearms code for merchants located in Arkansas, and recover a civil penalty up to $10,000 if the use of a firearms code continues after 30 days.

Prohibits an institutional fund (which is a fund held by an institution exclusively for charitable purposes) from:

■  Directly or indirectly eliminating, reducing, offsetting, or disclosing a reduction target for greenhouse gas emissions, including without limitation by restricting the exploration, production, utilization, transportation, sale, or manufacturing of timber, mining, agriculture, or fossil-fuel-based energy;

■ Instituting a corporate board or employment composition target or criterion that incorporate a characteristic protected in this state

■ Providing access to or facilitating an abortion, gender-reassignment, or sex-reassignment medication or procedure; 

■ Restricting public access to a firearm, ammunition, or a component part or accessory of a firearm, including without limitation by restricting the distribution, sale, manufacturing, importing, marketing, or advertising of a firearm, ammunition, or a component part or accessory of a firearm.

Title

Key Dates

Nature of
Action

ESG Category

Summary

SB41: To Regulate The Use Of Social Credit Scores Based On ESG Scores or Metrics

Introduced, but did not pass in the 2023 legislative session

Legislation

Target Entities that Boycott Certain Industries

■ Requires the state treasurer to divest if they determine (in consultation with the attorney general) that an investment manager discriminates "without a reasonable business purpose" against energy, fossil fuel, firearm, or ammunition industries or investments based on ESG factors. The state treasurer will name any financial services provider on a list on the state's website if they determine that the provider is discriminating based on the factors above.