Indiana

Title

Key Dates

Nature of
Action

ESG Category

Summary

HB1008: Pension investments

Effective date
7/1/2023

Adopted
5/4/2023

Introduced
1/12/2023

Legislation

Restrict Use of ESG Factors; Focus on Pecuniary Characteristics

■ Provides that if the treasurer of state concludes that the service provider has made an ESG commitment, the treasurer of state shall provide the name of the service provider and research supporting the conclusion to the board of trustees of the Indiana Public Retirement System (INPRS) (board).

■ Prohibits the board from making an investment decision with the purpose of influencing any social or environmental policy or attempting to influence the governance of any corporation for non-financial purposes. Prohibits the INPRS (system) from making an ESG commitment with respect to system assets.

■ Provides that in making and supervising investments of the system, the board shall discharge its duties solely in the financial interest of the participants and beneficiaries of the system for the exclusive purposes of providing financial benefits to participants and beneficiaries and defraying the reasonable expenses of administering the system.

■ Provides that the board, in accordance with certain fiduciary duties, shall make investment decisions with the primary purpose of maximizing the target rate of return on the board's investments. Prohibits the board from entering a contract or modifying, amending, or continuing a contract with a service provider that has made an ESG commitment unless taking the action violates the board's fiduciary duty to the system's participants and beneficiaries.

■ Requires the board to, at least annually, tabulate and report all proxy votes made by a service provider that is not a private market fund in relation to the administration of the system. Specifies certain persons and entities that are immune from civil liability and entitled to indemnification.

SUBSEQUENT DEVELOPMENTS
Following the passage of HB1008, Indiana State Treasurer Daniel Elliott clarified in an interview that the new law "only deals with decisions made by investment fund managers, not individual corporations." For example, Apple’s environmental goals would not cause the state to divest from it. He also assured that the ESG investing ban will not tie down Indiana's retirement fund.

Target Entities that Boycott Certain Industries

Indiana pension system contracts with conservative anti-ESG firm

Adopted and in effect
3/20/2023

Enforcement/Divestment

Restrict Use of ESG Factors; Focus on Pecuniary Characteristics

■ Local news reported that Indiana’s Public Retirement System is the first known state pension system to contract with anti-ESG firm Strive Advisory, LLC and its co-founder Vivek Ramaswamy to review its investment policy statement.

Attorney General Advisory Opinion 2022-3: Indiana Public Retirement System and ESG Investments

Adopted and in effect
9/1/2022

Attorney General Position

Restrict Use of ESG Factors; Focus on Pecuniary Characteristics

■ Applies to the INPRS. Concludes that Indiana law prohibits the INPRS from: (i) choosing investments or investment strategies based on ESG considerations; (ii) exercising rights appurtenant to investments (i.e., proxy voting) based on ESG or "extraneous" considerations; or (iii) retaining investment advisors that make investments, set strategies, engage with portfolio companies, or exercise voting rights appurtenant to investments based on ESG considerations. Investment managers and other agents delegated by the INPRS board assume the same statutory obligations and fiduciary duties.

Title

Key Dates

Nature of
Action

ESG Category

Summary

SB28: Equality in Financial Services Act

Introduced
1/8/2024

Legislation

Prohibit Discrimination on Basis of Social Credit or ESG Scores

■ Prohibits a financial services provider from discriminating in providing financial services to a consumer by using a social credit score as a basis for directly or indirectly: (1) declining to provide to the consumer full and equal access to one or more financial services; or (2) providing the consumer with one or more financial services on less favorable terms and conditions than would otherwise apply to the consumer if a social credit score were not used.  If enacted, the bill would be effective July 1, 2024. 

■ Specifies that the term "social credit score" does not include an analysis that involves a financial services provider's evaluation of any quantifiable risks of a consumer's participation in certain business activities or business associations, if the analysis is based on impartial, financial risk based standards that are: (1) established in advance; and (2) publicly disclosed to customers and potential customers; by the financial services provider.

■ If a financial services provider refuses to provide, terminates, or restricts one or more financial services with respect to a consumer, the consumer may request from the financial services provider a statement of the specific reasons constituting the basis for the refusal, termination, or restriction.

■ A violation of these provisions constitutes a deceptive act that is actionable under the deceptive consumer sales act only by the attorney general. Provides that a consumer aggrieved by a violation of these provisions may bring a civil action for damages, injunctive relief, or both. 

Title

Key Dates

Nature of
Action

ESG Category

Summary

SB372: Fiduciary duties of pension system administrators

Introduced, but did not pass in 2023 legislative session

Legislation

Restrict Use of ESG Factors; Focus on Pecuniary Characteristics

■ Similar to HB1008, but also includes an enforcement mechanism under the authority of the state attorney general, and any violation shall equal three times the amount paid to a company that is serving as a fiduciary to a fund of the public pension system.

SB292: INPRS investments

Introduced, but did not pass in 2023 legislative session

Legislation

Restrict Use of ESG Factors; Focus on Pecuniary Characteristics

■ Requires the board of the INPRS to make investment decisions with the primary purpose of maximizing the target rate of return on investments. Prohibits the board from making decisions with the goal of influencing social or environmental policy or attempting to influence company governance for nonpecuniary purposes.

SB170: Pension Investments in Fossil Fuel Companies

Introduced, but did not pass in 2022 legislative session

Legislation

Promote Divestment from Certain Industries

■ Requires the INPRS board to establish a plan to divest of any publicly traded company that has been identified as among the 200 largest reserve-owning fossil fuel companies based on the amount of carbon emissions in the company's oil, gas, and coal reserves and to complete divestment in restricted companies by December 31, 2029.

HB1224: Government Investments and Contracts

Introduced, but did not pass in 2022 legislative session

Legislation

Target Entities that Boycott Certain Industries

■ Applies to the INPRS. Requires the Board for Depositories to maintain a list of financial companies that boycott energy companies. Requires divestment within 360 days if a listed financial company does not cease its boycott within 90 days of receiving the notice of the intention to divest.