New Hampshire | Ropes & Gray LLP

State Regulations

Legislation/Guidance in Effect

Title	Key Dates	Nature of Action	ESG Category	Summary
HB457: Prohibiting ESG Investments by State Treasurer and the Retirement System	Effective date 8/29/2023 Adopted 6/21/2023 Introduced 2/23/2023	Legislation	Restrict Use of ESG Factors; Focus on Pecuniary Characteristics	■Amends legislation governing both the state treasurer and retirement system to require that all investments and management must be governed by the traditional fiduciary duty to maximize financial benefits for New Hampshire or any beneficiaries of the state’s trust funds This duty precludes doing business with financial institutions that “prioritize social, political, or ideological interests above or concert with” this traditional duty. ■Moreover, the management, investment, and reinvestment practices for the assets held in trust by the New Hampshire Retirement System board shall be subject to review by the legislature, and that the independent investment committee and the board of trustees shall report on a quarterly basis to the office of legislative budget assistant regarding compliance with the duty to make all investment decisions solely in the interest of the participants and beneficiaries of the state retirement system. The report shall note the existence of any investment funds that may have mixed, rather than sole, interest investment motivations.
Executive Order (EO) 2023-3: An Order Directing State Entities to Prioritize Investment Returns and Minimize Risk in Fulfillment of Their Fiduciary Duties	Adopted and in effect 4/10/2023	Governor Position	Restrict Use of ESG Factors; Focus on Pecuniary Characteristics	■EO 2023-03 says New Hampshire Executive Branch agencies that are permitted to invest funds shall review their investments and pursue any necessary steps to ensure that no funds or state- controlled investments are invested with firms that invest New Hampshire funds in accounts solely based on ESG criteria. Additionally, the New Hampshire Retirement System is strongly encouraged to adhere to their fiduciary obligation and not invest with any firm that will invest state pension funds in funds that follow ESG criteria. ■EO 2023-03 says the State Treasurer shall and the New Hampshire Retirement System is encouraged to report on an annual basis to the Governor and the relevant legislative committees regarding compliance with the duty to make investment decisions based upon the fiduciary duty to maximize short or long term financial benefits for the state. The report shall note the existence of any investment funds that may have mixed, rather than pure, fiduciary interest investment motivations.
HB1469: Establishes Committee to Study the Need for Anti-Discrimination Legislation in the New Hampshire Financial Services Industry	Effective date 6/17/2022 Adopted 6/9/2022 Introduced 1/5/2022	Legislation	Prohibit Discrimination on Basis of Social Credit or ESG Scores	■Establishes a committee dedicated to studying the need for anti-discrimination legislation in the New Hampshire financial services industry based on legally protected activities, such as expression of political viewpoints and possession or sales of firearms that could cause a financial institution to decline to engage in business with an individual.

Past/Inactive Legislation

Title

Key Dates

Nature of
Action

ESG Category

Summary

SB520: Relative to the fiduciary duty and proxy voting activities of public retirement systems

Introduced, but did not pass in the 2024 legislative session

Legislation

Restrict Use of ESG Factors; Focus on Pecuniary Characteristics

■ Requires state and local public retirement system fiduciaries to discharge their duties solely in the financial interests of the participants and beneficiaries.

■ Provides that “financial” does not include any action taken, or factor considered, by a fiduciary with any purpose whatsoever to further social, political, or ideological interests. A fiduciary may reasonably be determined to have considered factors or taken action to further social, political, or ideological interests if they make a commitment to further eliminate, reduce, offset, or disclose greenhouse gas emission; institute or assess corporate board, or employment, composition, compensation, or disclosure criteria that incorporates characteristics protected in this state under RSA 354-B; divest from, limit investment in, or limit the activities or investments of, any company, for failing, or not committing, to meet environmental standards or disclosures; further access to abortion, sex or gender change or transgender surgery; or divest from, limit investment in, or limit the activities or investments of, any company that engages in, facilitates, or supports the manufacture, import, distribution, marketing or advertising, sale, or lawful use of firearms, ammunition or components parts and accessories of firearms or ammunition.

■ All shares held directly or indirectly by or on behalf of a public retirement system and/or the participants and their beneficiaries shall be voted solely in the financial interest of participants and their beneficiaries.

■ Unless no economically practicable alternative is available, a public retirement system may not grant proxy voting authority to any person who is not a member, unless that person has a practice of, and in writing commits to, follow guidelines that match the board of trustees' obligation to act solely upon financial factors.

■ Unless no economically practicable alternative is available, public retirement system assets shall not be entrusted to a fiduciary, unless that fiduciary has a practice of, and in writing commits to, follow guidelines, when engaging with portfolio companies and voting shares or proxies, that match the board of trustees' obligation to act solely upon financial factors.

■ Unless no economically practicable alternative is available, an investment manager, fiduciary, or board of trustees may not adopt a practice of following the recommendations of a proxy advisor or other service provider, unless such advisor or service provider has a practice of, and in writing commits to, follow proxy voting guidelines that match the board of trustees' obligation to act solely upon financial factors.

HB1267: Relative to prohibiting environmental, social, and governance standards in the selection of government investments.

Introduced, but did not pass in the 2024 legislative session

Legislation

Restrict Use of ESG Factors; Focus on Pecuniary Characteristics

■ Executive branch agencies shall prioritize investment decisions that maximize financial returns and minimize risk, as part of their fiduciary duty to act in the best interest of the state and the beneficiaries of New Hampshire's trust funds. Executive branch agencies that are permitted to invest funds shall review their investments and pursue any necessary steps to ensure that no funds or state-controlled investments are invested with firms that invest New Hampshire funds in accounts with any regard whatsoever based on ESG criteria.

■ The New Hampshire retirement system shall adhere to their fiduciary obligation and not invest with any firm that will invest state retirement system funds in investment funds that consider ESG criteria, as the investment goal should be to obtain the highest return on investment for New Hampshire's taxpayers and retirees.

■ The state treasurer and the New Hampshire retirement system shall each report on an annual basis to the governor and the relevant legislative committees regarding compliance with the duty to make investment decisions based upon the fiduciary duty to maximize short or long term financial benefits for the state. The report shall note the existence of any investment funds that may have mixed, rather than pure, fiduciary interest investment motivations.

■ It shall be a felony punishable by not less than one year, and not more than 20 years imprisonment to violate the provisions of this law by investing state or taxpayer funds knowingly in a manner violating fiduciary duty concerning ESG criteria.

SUBSEQUENT DEVELOPMENTS:

According to a report from Pensions & Investments, a New Hampshire House of Representatives committee voted unanimously on January 30, 2024 to oppose a bill that would designate as a felony to knowingly invest using ESG principles by state and New Hampshire Retirement System officials. "We voted to recommend that the House kill the bill," said Carol McGuire, chairwoman of the House Executive Departments and Administration Committee, in an email.

The 13-0 vote followed a public hearing in which opponents outnumbered supporters in oral and in written testimony. 34 opposed the bill while three supported it. "We believe this legislation could only serve to limit our ability as fiduciaries to act solely in the best interest of our membership and maintain our status as a qualified pension trust, which is already clearly defined in existing law," said Marty Karlon, a spokesman for the $11.1 billion New Hampshire Retirement System, Concord, to the committee.