ESG Battlegrounds:
How the States Are Shaping the Regulatory Landscape in the U.S.

Updated as of
September 2024

Introduction
Socially responsible investing principles have been around since the 1960s,1 but have only recently undergone scrutiny
by state legislative bodies. In 2021, Texas was the first state to pass a so-called anti-boycott law.2 Since then, 35 otherstates have passed either pro- or anti-ESG bills related to financial institutions and other large companies, fracturing
an already complicated landscape for financial services companies, including private investment managers that invest
money on behalf of state pensions.
Anti-ESG legislation primarily takes the following forms:
Anti-ESG investing laws prohibit the consideration of “non-pecuniary” factors by public pension funds orstate and local government authorities and their investment managers as being inconsistent with the exerciseof fiduciary duties. The measures define this concept differently, but ultimately capture the use of factors otherthan those that seek specifically to maximize investment returns.

Anti-boycott laws restrict the ability of state entities to do business with companies that “boycott” or“discriminate” against certain industries disfavored by the ESG movement; several measures require or
authorize state regulators to develop and maintain a blacklist of financial entities that engage in boycotts offossil fuel companies.

Contracting restriction laws either (i) compel companies entering into contracts with state entities to attest,
as a condition of doing business with public entities, that they do not and will not engage in boycotts during thelife of the contract or (ii) prohibit state entities from contracting with companies on the basis of ESG factors.

Anti-discrimination laws primarily prohibit entities from discriminating in business decisions on the basisof ESG scores.

Pro-ESG legislation generally falls into one of the following categories:Consideration of ESG factors laws generally require state entities to consider environmental, social andother sustainability factors in investment and contracting decisions.



Divestment/investment restriction laws prohibit state entities from making new investments in certain
ESG disfavored industries and require divestment from existing investments in such industries.



ESG-related disclosure laws require disclosure of climate-related metrics and risks (in reference to the
GHG Protocol or the TCFD recommendations), disclosures related to voluntary carbon offsets and/or
disclosures that report diversity metrics.

The charts below summarize relevant state anti- and pro-ESG laws and categorize them into the noted groups. The
charts also include related state policies, resolutions and statements, as well as multi-state anti- and pro-ESG
initiatives.

1“The Evolution of ESG Investing,” MSCI, available here.

2

SB 13, in effect 9/1/21.

Simpson Thacher & Bartlett LLP

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Please click below to access the following information:
Anti-ESG Laws: By State

Anti-ESG Resolutions / Policies / Statements: By State

Anti-ESG Multi-State Initiatives

Pro-ESG Laws: By State

Pro-ESG Resolutions / Policies / Statements: By State

Pro-ESG Multi-State Initiatives

For further information regarding this Alert, please contact one of the following authors:
Leah Malone

Emily B. Holland

Tenzin Dolkar+1-212-455-3560+1-202-636-5987+1-212-455-2844

leah.malone@stblaw.com

emily.holland@stblaw.com

tenzin.dolkar@stblaw.com

Alexis V. Capati

Chayla S. Sherrod+1-212-455-3266+1-212-455-2779

alexis.capati@stblaw.com

chayla.sherrod@stblaw.com

SimpsonThacherWorldwide

The contents of this publication are for informational purposes only. Neither this publication nor the lawyers who
authored it are rendering legal or other professional advice or opinions on specific facts or matters, nor does the
distribution of this publication to any person constitute the establishment of an attorney-client relationship. Simpson
Thacher & Bartlett LLP assumes no liability in connection with the use of this publication. Please contact your relationshippartner if we can be of assistance regarding these important developments. The names and office locations of all of ourpartners, as well as our recent memoranda, can be obtained from our website, www.simpsonthacher.com.

Simpson Thacher & Bartlett LLP

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Anti-ESG Laws: By State
Anti-ESG Investing

StatuteAnti-Boycott

Contracting Restriction

Anti-Discrimination

Description

Exceptions/Notes

Prohibits state governmental entities from entering into contracts for goods
or services (valued at $15K or more) absent written verification that thecompany does not and will not engage in an economic boycott againstcompanies in the fossil fuel, timber, mining, agriculture or firearms
industries, companies that do not meet or commit to meet environmental
standards or make DEI disclosures, or companies that do not facilitate orcommit to facilitate access to abortion or sex or gender change treatments,
during the term of the contract.

Does not apply to a contract relating to the issuance, incurrenceor management of debt obligations or the deposit, management,
borrowing or investment of funds.

Requires public pension benefit plan fiduciaries to consider only pecuniary
factors in investment decisions.

Acknowledges circumstances in which ESG considerations may
be pecuniary and evaluated in public investment decisions.

Introduces requirements with respect to shareholder and proxy voting.

Provides exception regarding proxy voting advisor requirements
where no economically practicable alternative available.

Creates ESG Oversight Committee.

Exempts an investment otherwise subject to divestment but
locked into a maturity date such that an early divestment would
result in a financial penalty and cause negative financial impact
to the state.

Alabama
SB 261, in effect
8/1/23Contracting
Restriction

May be waived in situations where the governmental entity
determines it would significantly increase costs or limit thequality of options or services available, and a waiver would be in
the best interest of the public.

Arkansas
HB 1253, in effect
8/1/23

HB 1307, in effect
8/1/23Anti-ESG InvestingAnti-Boycott

Requires State Treasurer to maintain a list of financial services providers(determined by the ESG Oversight Committee) that discriminate againstcompanies in the energy or firearms industries or otherwise refuse to deal
with companies based on environmental, social justice, and othergovernance-related factors.
Prohibits public entities from investing cash funds with a listed financial
services provider; requires State Treasurer and public entities to divest state
assets from all direct or indirect holdings with a listed financial services
provider.

Anti-ESG Laws: By State

3

Statute

Description

Exceptions/Notes

HB 1845, in effect
8/1/23Anti-Boycott

Clarifies what information the ESG Oversight Committee may consider andrely on when determining whether or not to list a financial services provider
for divestment purposes.

SB 62, in effect 8/1/23

Contracting
Restriction

Prohibits public entities from entering into contracts for goods or services(valued at $75K or more) absent written verification that the company does
not and will not engage in boycotts of companies engaged in the energy, fossil
fuel, firearms and ammunition industries during the term of the contract.

Does not apply to companies that offer to provide goods orservices for at least 20% less than the lowest certifying business.

Anti-ESG Investing

Requires all state and local investment decisions to be made on the basis ofpecuniary factors only.

Wide-ranging law that covers a number of related areas. See ourprevious client memo for additional information.

FloridaHB 3, in effect 7/1/23

Prohibits state and local entities from issuing ESG bonds.
Requires shareholder rights like proxy voting to be exercised only on the basisof pecuniary factors.
Requires retirement systems and plans to offer annual reporting to state
governmental bodies on their governance policies, voting decisions andadherence to fiduciary standards.
Requires any communications between an investment manager to a company
in which the manager invests public funds on behalf of a governmental entitythat discuss ESG interests, or advocate for an entity other than shareholders,
to include a conspicuous disclaimer that the views are the sender’s and not
the state’s.
Prohibits financial institutions from discriminating in the offering or denial of
financial services on the basis of non-quantitative or risk-based factors,
including political or religious ideology or a “social credit score.”
HB 989, in effect
7/1/24Anti-Discrimination

Anti-ESG InvestingAnti-ESG Laws: By State

Amends Section 655.0323, Florida Statutes, as established by HB 3, toprovide a customer complaint process for customers to report financial
institutions they suspect have engaged in an “unsafe and unsound practice”,
as defined in Section 655.0323/HB 3.

Anti-Boycott

Contracting Restriction

Anti-Discrimination
4

Statute

Description

Exceptions/Notes

Georgia
HB 1018, in effect
4/22/24

Anti-Discrimination

Prohibits financial institutions from refusing to provide financial services to,refraining from continuing to provide existing financial services to,terminating existing financial services with, or otherwise discriminating inproviding financial services to, a person or trade association solely becausesuch person or trade association is engaged in the lawful commerce of
firearms or ammunition products.
Prohibits financial institutions from requiring the use of a firearms code that
distinguishes firearms retailers physically located in the state from otherretailers, except as required by law.
Prohibits financial institutions from discriminating against firearms retailers
by declining lawful payment card transactions based on the assignment/nonassignment of a firearms code.

HB 481, in effect
7/1/24Anti-ESG Investing

Requires public retirement system assets to be invested solely in the interestsof plan participants and their beneficiaries for the exclusive purpose ofproviding plan benefits. Prohibits the promotion of nonpecuniary interests,
including the furtherance of social, political, or ideological interests.
Requires all votes to be solely and exclusively in the best economic interests
or rights of the retirement system.

Idaho
HB 190, in effect
7/1/23Anti-Boycott

Prohibits banks and credit unions designated as state depositories fromboycotting companies/individuals engaged in fossil fuel-based energy,
timber, minerals, hydroelectric power, nuclear energy, agriculture or firearms
industries; requires state depositories to file affidavits with the statetreasurer, including an anti-boycott certification; noncompliance is subject torevocation of the QPD designation.

HB 191, in effect
7/1/23Contracting
Restriction

Prohibits public entities from accepting or denying a contract based on
subjective ethical or sustainability criteria unrelated to the specifications of acontract or qualifications of the contractor.

Anti-ESG InvestingAnti-ESG Laws: By State

Anti-Boycott

Contracting Restriction

Certification requirement does not apply to state depository
designation if it would be inconsistent with the constitutional or
statutory duties of the state treasurer, or would negatively impact
the business needs of the state.

Anti-Discrimination
5

Statute
SB 1405, in effect
7/1/22Anti-ESG Investing

Description

Exceptions/Notes

Prohibits public entities from considering ESG characteristics in investment
decisions in a manner that could override the prudent investor rule.

Public entities serving as fiduciaries to select investment options
for investors may offer ESG- preferred investments toparticipants if they are optional and sufficient alternatives areoffered.

Requires notification by investment agents when they adopt or revise a policy
related to disfavored investments or investment limitations identified asagainst the public policy of the state, and applicable to state investments.
Introduces requirements with respect to proxy voting.
SB 1291, in effect
7/1/24Contracting
Restriction

Prohibits state governmental entities from entering into contracts for goods
or services (valued at $100K or more) with a company absent written
verification that the company does not and will not engage in boycotts againstcompanies in the fossil fuel-based energy, timber, minerals, hydroelectric
power, nuclear energy, agriculture or firearms industry during the term of thecontract.

Does not apply if (i) inconsistent with constitutional or statutory
duties relating to the issuance, incurrence or management of debt
obligations or the deposit, management, borrowing or investmentof funds or (ii) contrary to the business needs of the public entity
and would prevent public entity from fulfilling its legal duties or
obligations.

Anti-ESG Investing

Prohibits state public retirement system board from making investment
decisions to influence social or environmental policy, or attempting to
influence the governance of any corporation for nonfinancial purposes, andprohibits system from making a commitment with the nonfinancial purpose
to further social, political or ideological interests with respect to systemassets.

Does not apply to a bank holding company or a subsidiary of abank holding company, defined contribution plans, annuity
savings plan or a private market fund.

Indiana
HB 1008, in effect
7/1/23Introduces requirements with respect to proxy voting.
Contracting
Restriction

Prohibits board from contracting with a service provider that acts with thenonfinancial purpose to further social, political or ideological interests.

Does not apply to a bank holding company or a subsidiary of abank holding company, defined contribution plans, annuity
savings plan or a private market fund.
Provides examples where a service provider may be determined
to have made an ESG commitment.
Exception where it would violate the board’s fiduciary duty or
there is no comparable replacement service provider.

Anti-ESG InvestingAnti-ESG Laws: By State

Anti-Boycott

Contracting Restriction

Anti-Discrimination
6

Statute

Description

Exceptions/Notes

Requires fiduciaries of state public employees retirement system assets toconsider only financial factors in making and supervising investments of thesystem.

Alternative or real estate investments as defined in state law
exempted.

Kansas
HB 2100, in effect
7/1/23Anti-ESG Investing

Introduces requirements with respect to proxy voting.
Imposes penalty for violations (equal to 3x the fees paid for services).

Exception to investment restriction where no economicallypracticable alternative available.
Provides examples where a fiduciary may be determined to havetaken an action or considered a factor with a purpose offurthering social, political or ideological interests.
Exception regarding proxy voting advisor requirements where no
economically practicable alternative available.

Contracting
Restriction

Prohibits state and state agencies from discriminating in procurement
decisions based on ESG factors.

Anti-ESG Investing

Requires state-administered retirement system fiduciaries to consider only
pecuniary factors in investment decisions, and prohibits the consideration ofor actions with respect to ESG interests.

Kentucky
HB 236, in effect
6/29/23

Introduces requirements with respect to proxy voting.
SB 205, in effect
4/8/22Anti-Boycott

Requires (i) State Treasurer to prepare and maintain a list of publicly-tradedfinancial companies that have engaged in boycotts against companies in thefossil fuel-based energy industry and (ii) state governmental entities to divest
from listed financial companies that do not cease engaging in boycotts againstcompanies in the fossil fuel-based energy industry within establishedtimeframes; applies to state governmental entities involved in state
investment, deposits or transactions above a specified threshold.

Evidence that a fiduciary has considered or acted on a
nonpecuniary interest includes statements, reports,
communications with portfolio companies, votes of shares andparticipation in coalitions or initiatives.

Allows a state governmental entity to cease divesting where
reasonable evidence shows that it has suffered or will suffer amaterial financial loss.
Does not apply where the state governmental entity determines
the requirements are inconsistent with the entity’s fiduciary
responsibility.
Not required to divest from any indirect holdings in actively or
passively managed investment funds or private equity funds.
Notes: An initial list of financial companies was released on
1/3/23.

Anti-ESG InvestingAnti-ESG Laws: By State

Anti-Boycott

Contracting Restriction

Anti-Discrimination
7

Statute

Description

Exceptions/Notes

Contracting
Restriction

Prohibits state governmental entities from entering into contracts for goods
or services (valued at $100K or more) with a company absent written
verification that the company does not and will not engage in boycotts againstcompanies in the fossil fuel-based energy industry during the term of thecontract.

Does not apply if inconsistent with constitutional, statutory or
fiduciary duties relating to the issuance, incurrence ormanagement of debt obligations or the deposit, management,
borrowing or investment of funds.

HCR 70, in effect
5/30/23

Anti-Boycott

Requires state, statewide retirement systems and the state treasurer to submit
a report to the legislature that includes the names of (i) any investment
management company, investment advisor, mutual fund, or other entity incontract with the state that uses ESG factors not directly related to riskadjusted returns, and (ii) any entity under contract known to boycottcompanies in the fossil fuel-based energy industry.

SB 234, in effect
8/1/24Contracting
Restriction

Prohibits public entities from entering into contracts for the purchase ofgoods or services (valued at $100K or more) with a company with at least 50
FTE renewed/entered into on or after 8/1/24, absent written verification thatthe company does not and will not discriminate against an entity or tradeassociation in the firearm and ammunition industries.

Does not apply where the governmental entity contracts with asole-source provider or does not receive bids from a company
that is able to provide the required written verification.

Requires state board of investments to consider only pecuniary factors inpublic investment decisions.

Acknowledges circumstances in which ESG considerations may
be pecuniary and evaluated in public investment decisions.

Introduces requirements with respect to proxy voting.

Exception regarding proxy voting advisor requirements where no
economically practicable alternative available.

Louisiana

Refusal to engage in a business relationship with an entity or
trade association in the firearms industry in order to comply withfederal, state, or local law, policy, regulation or directive or for a
traditional or ordinary business reason specific to the customer
and not based solely on an entity/association’s status, is notdeemed to be discriminatory.

Montana
HB 228, in effect
4/19/23

Anti-ESG InvestingAnti-ESG InvestingAnti-ESG Laws: By State

Anti-Boycott

Contracting Restriction

Anti-Discrimination
8

Statute

Description

Exceptions/Notes

Contracting
Restriction

Prohibits state governmental entities from entering into contracts for goods
or services (valued at $100K or more) with a company absent written
verification that the company does not and will not discriminate against an
entity or trade association in the firearms industry during the term of thecontract.

Does not apply (i) to agreements related to investment services
and (ii) where the governmental entity contracts with a solesource provider or does not receive bids from a company that isable to provide the required written verification.

HB 457, in effect
8/29/23

Anti-ESG Investing

Requires state retirement system independent investment committee andboard of trustees to file quarterly reports regarding compliance with duty tomake all investment decisions solely in the interest of the participants andbeneficiaries of the state retirement system.

Report must include the existence of any investment funds that
may have mixed, rather than sole, interest investment
motivations.

HB 1469, in effect
6/17/22Anti-Discrimination

Establishes committee to study the need for anti-discrimination legislation in
the state’s financial services industry.

Anti-ESG Investing

Requires the State Treasurer and state pension plan fiduciaries to consider
only pecuniary factors in the evaluation of investment decisions or exercise ofrights in association with investments.

HB 356, in effect
10/1/23

New Hampshire

North Carolina
HB 750, in effect
6/27/23

May consider environmental or social considerations as
pecuniary factors only if qualified investment professionals
would treat these risks and opportunities as material economic
considerations.
May reasonably conclude that not exercising a right is in the bestinterest of the fund’s beneficiaries.

Contracting
Restriction

Prohibits the state and state agencies from considering ESG criteria or
economically targeted investment requirements in the awarding of state
contracts.

Anti-ESG Investing

Prohibits investment of state funds for the purpose of social investment,
which includes the consideration of ESG impact criteria for the purpose ofobtaining an effect other than the maximization of return.

North Dakota
HB 1429, in effect
8/1/23Introduces requirements with respect to proxy voting.

Anti-ESG InvestingAnti-ESG Laws: By State

Anti-Boycott

Contracting Restriction

Does not apply where state investment board can demonstratethat a social investment would provide an equivalent or superiorrate of return as compared to a similar non-social investment
with a similar time horizon and risk.

Anti-Discrimination
9

Statute
Anti-Discrimination

Description

Exceptions/Notes

Prohibits insurers from refusing to insure or charging a different rate basedon ESG criteria, DEI policies, or political and ideological factors.

Insurance prohibition does not apply in cases where the refusal
or different rate is the result of the application of soundunderwriting and actuarial principles.

Requires state bank to study ESG trends, laws and policies that impact
businesses in the state, and to issue a report of its findings andrecommendations.
SB 2291, in effect
3/24/21Anti-ESG Investing

Prohibits investment of state funds for purpose of social investment.
Requires state Department of Commerce study on ESG-related investment
policies, state involvement with companies that consider ESG factors in theirdecisions, and the implications of total divestment from companies thatboycott energy or commodities.

Does not apply where state investment board can demonstratethat a social investment would provide an equivalent or superiorrate of return as compared to a similar non-social investment
with a similar time horizon and risk.

Oklahoma
HB 2034, in effect
11/1/22*Anti-Boycott*Enforcement
suspended as of
5/7/24

Requires (i) State Treasurer to prepare and maintain a list of publicly-tradedfinancial companies that have engaged in boycotts of companies in the fossil
fuel-based energy industry and (ii) state governmental entities to divest fromlisted financial companies that do not cease engaging in boycotts againstcompanies in the fossil fuel-based energy industry within establishedtimeframes; applies to all state retirement systems.

As of July 19, 2024, the law is permanently enjoined (subject toappeal) on the basis that its terms violate the state constitution
and are impermissibly vague.
Absent the decision, the law allows a state governmental entity tocease divesting where clear and convincing evidence shows that it
has suffered or will suffer a material financial loss; describes suchloss as a loss in the value of assets under management as opposed
to material financial loss.
Does not apply where the state governmental entity determines
the requirements are inconsistent with the entity’s fiduciary
responsibility.
State entities are not required to divest from any indirect
holdings in actively or passively managed investment funds or
private equity funds.
An initial list of financial companies was released on 5/3/23 andupdated on 8/15/23.
In August 2023, Oklahoma Public Employee Retirement System,
which holds over $10 billion in assets, voted to take the financial
exemption to avoid divesting from a listed asset manager.

Anti-ESG InvestingAnti-ESG Laws: By State

Anti-Boycott

Contracting Restriction

Anti-Discrimination
10

Statute

Description

Exceptions/Notes
On April 22, 2024, the Oklahoma Rural Association published areport on the adverse effects of HB 2034, finding that thismeasure caused a 15.7% increase in Oklahoma’s municipalities’
borrowing costs, and close to $185M in additional expenses since
its enactment.

Contracting
Restriction

Prohibits state governmental entities from entering into contracts for goods
or services (valued at $100K or more) with a company absent written
verification that the company does not and will not boycott companies in thefossil fuel-based energy industry during the term of the contract.

Does not apply where the state governmental entity determines
the requirements are inconsistent with the entity’s fiduciary
responsibility.

Anti-ESG Investing

Requires the state Retirement System Investment Commission to consider
only pecuniary factors when investing and managing retirement systemassets.

The commission may use a proxy firm or advisory service inexercising shareholder proxy rights provided the proxy advisor
commits in writing to follow proxy guidelines that are consistent
with a focus on pecuniary factors.

South Carolina
HB 3690, in effect
2/5/24

Requires the commission to cast shareholder proxy votes in line with its
fiduciary duties based on pecuniary factors, and any engagement with acompany regarding the exercise of shareholder proxy votes to be based solely
on pecuniary factors and for the sole purpose of maximizing shareholder
value.
Tennessee
HB 2100, in effect
7/1/24Anti-Discrimination

Prohibits financial institutions from canceling or denying services to a person
based on, inter alia, the person’s political or religious values or use of social
credit scores, with the latter based on various factors, including but notlimited to engagement in the firearms and ammunition, fossil-fuel basedenergy, timber, mining or agriculture industries or failure to meet specified
ESG criteria.
Requires financial institutions to provide statement of specific reasons forrefusal of services within 30 days of receiving a person’s request for such astatement if the request is made within 90 days of the financial institution’s
refusal, restriction or termination of service to that person.

Does not apply where the financial institution claims a religious
purpose for provision or denial of services based on the current
or prospective customer’s religious beliefs, exercise or affiliation.
Insurance prohibition does not apply where the refusal ordifferent rate is the result of the application of soundunderwriting and actuarial principles or where the insurer claims
a religious purpose for the refusal or different rate based on thecurrent or prospective customer’s religious beliefs, exercise oraffiliation.

Prohibits insurers from refusing to insure or charging a different rate basedon the person’s political, ideological or religious values or affiliations.

Anti-ESG InvestingAnti-ESG Laws: By State

Anti-Boycott

Contracting Restriction

Anti-Discrimination
11

Statute
SB 955, in effect
5/17/23

Description
Anti-ESG Investing

Exceptions/Notes

Restricts State Treasurer to investment decisions based on financial factors,
which does not include ESG interests that may not be material to the financial
analysis of the investment.
Introduces requirements with respect to proxy voting.

SB 2649, in effect
7/1/22Contracting
Restriction

Prohibits State Treasurer from entering into contracts or amendments withany state depository that has a policy prohibiting financing to companies in
the fossil fuel industry.

Does not apply where the governmental entity determines thestate depository’s services are necessary for it to perform its
functions and/or services may not be obtained elsewhere.

SB 833, in effect
9/1/23Anti-Discrimination

Prohibits state insurers from using an ESG model, score, factor or standard to
charge a rate different than the rate charged to another business or risk in thesame class for a similar hazard.

An insurer does not violate the statute if its actions are based onan ordinary insurance business purpose, including the use ofsound actuarial principles, or financial solvency considerations
reasonably related to the type of risk.

SB 13, in effect 9/1/21

Anti-Boycott

Requires (i) State Treasurer to prepare and maintain a list of publicly-tradedfinancial companies that have engaged in boycotts against companies in thefossil fuel-based energy industry and (ii) state governmental entities to divest
from listed financial companies that do not cease engaging in boycotts againstcompanies in the fossil fuel-based energy industry within establishedtimeframes.

Allows a state governmental entity to cease divesting where clear
and convincing evidence shows that it has suffered or will suffer amaterial financial loss.

Texas

Does not apply where the state governmental entity determines
the requirements are inconsistent with the entity’s fiduciary
responsibility.
Not required to divest from any indirect holdings in actively or
passively managed investment funds or private equity funds.
Notes: An initial list of financial companies was released on
8/24/22, updated on 3/20/23, and most recently updated again
on 11/1/23.
The Office of the Attorney General (“OAG”) sent a letter
expressing concern for a large U.K. bank’s affiliation with the Net
Zero Alliance, implying that the bank may be a fossil fuelboycotter. On 1/26/24, the OAG announced the bank’s
ineligibility to participate in Texas’s bond market.
The Comptroller published updated FAQ related to themethodology used in the creation and publication of the list in
October 2023.

Anti-ESG InvestingAnti-ESG Laws: By State

Anti-Boycott

Contracting Restriction

Anti-Discrimination
12

Statute

Description

Exceptions/Notes
On 3/19/24, the Texas Permanent School Fund Corporation
announced the termination of two contracts for investment
management services with a large investment managementcompany on the basis that the company boycotts energy
companies.

SB 19, in effect 9/1/21

Contracting
Restriction

Prohibits state governmental entities from entering into contracts for goods
or services (valued at $100K or more) with a company absent written
verification that the company does not and will not engage in a boycott ofcompanies in the fossil fuel-based energy industry during the term of thecontract.

Does not apply where the state governmental entity determines
the requirements are (i) inconsistent with the entity’s fiduciary
responsibility or (ii) inconsistent with the governmental entity’s
constitutional or statutory duties related to managing its
investment of funds.

Contracting
Restriction

Prohibits state governmental entities from entering into contracts for goods
or services (valued at $100K or more) with a company absent written
verification that the company does not and will not discriminate against an
entity or trade association in the firearms industry during the term of thecontract.

Does not apply where the governmental entity contracts with asole-source provider or does not receive bids from a company
that is able to provide the required written verification.

Requires public entities to invest public funds with the sole purpose of
maximizing risk-adjusted returns.

Exempts certain funds.

Certain other contracts exempted.

Utah
SB 96, in effect 5/3/23

Anti-ESG Investing

Introduces requirements with respect to proxy voting.
SB 97, in effect 5/3/23

Contracting
Restriction

Prohibits public entities from entering into contracts for goods or services(valued at $100K or more) with a company absent written verification thatthe company does not and will not, during the term of the contract, boycottcompanies in the fossil fuel-based energy, timber, mining, agriculture or
firearms industries, companies that do not meet or commit to meetenvironmental standards, and companies that do not facilitate or commit tofacilitate access to abortion or sex characteristic surgical procedures.

HB 449, in effect
7/1/23Anti-Boycott

Prohibits companies from coordinating to eliminate viable options forcompanies in the firearms industry to obtain a product or service.

Anti-ESG InvestingAnti-ESG Laws: By State

Anti-Boycott

Contracting Restriction

Permits public entities to contract with restricted companies
where there is no economically practicable alternative, or tocomply with federal law.

Anti-Discrimination
13

Statute
HB 281, in effect
5/2/23

Description

Exceptions/Notes

Anti-Discrimination

Prohibits governmental entities from using social credit scores and requires
state consumer protection division to establish and operate a system toreceive consumer reports regarding a company’s or financial institution’s use
or creation of a social credit score to discriminate against, advocate for or
cause adverse or preferential treatment of a person.

HB 2862, in effect
6/8/23Anti-ESG Investing

Introduces requirements with respect to shareholder and proxy voting.

Includes an exception where “reasonable efforts” have been madeamong other factors.

SB 262, in effect
6/10/22Anti-Boycott

Authorizes State Treasurer to prepare and maintain a list of financial
companies that have engaged in boycotts of companies in the fossil fuel-basedenergy industry, to exclude listed companies from the selection process forstate banking contracts, to refuse to enter into banking contracts with listedcompanies, and to require, as a term of banking contracts, an agreement by afinancial institution not to engage in energy company boycotts for theduration of the contract.

An initial list of five restricted financial companies was releasedon 7/28/22. On 2/22/24, the State Treasurer notified six
additional companies by letter that they would be added to thelist unless they demonstrate within 30 days of receipt of the letterthat they are not boycotting fossil fuels. On 4/8/24, the State
Treasurer added an additional four banks to the restrictedfinancial companies list.

Anti-Boycott

Prohibits financial institutions from discriminating against companies ortrade associations in the firearms industry.

Does not apply where a financial institution opts not to provide
services for business or financial reasons or pursuant to aregulation or written company policy prohibiting discrimination
against these entities.

West Virginia

Wyoming
HB 0236, in effect
7/1/21Anti-ESG InvestingAnti-ESG Laws: By State

Anti-Boycott

Contracting Restriction

Anti-Discrimination
14

Anti-ESG Resolutions / Policies / Statements: By State
MeasureDescription

Alabama
Attorney General Written Testimony, 5/10/23

States that ESG policies threaten America’s democratic system, focusing on climate alliances.

ArizonaState Treasurer’s Office investment policy
statement, adopted 8/30/22

Prohibits consideration of non-pecuniary factors when evaluating state investments or discharging duties.
Introduces requirements with respect to shareholder and proxy voting.
Prohibits lending securities to any borrower with a practice of or a commitment to engaging with companies or voting shares based on nonpecuniary factors.
Note: On 2/13/23, the State AG announced that Arizona would end investigations into financial institutions pursuing ESG investing, which were
initiated under the state’s previous AG; it is unclear how and to what extent the statement affects implementation of the revised investment policy.

FloridaState Board of Administration revised
investment policy, in effect 8/23/22

Restricts state board evaluation of retirement system investment decisions to pecuniary factors.

CFO Directive, 1/23/23

Prohibits asset managers from investing income of participants in state’s deferred compensation program in financial products associated with
ESG standards.

Georgia
General Statement of Investment Policy, 9/15/22

Anti-ESG Resolutions / Policies / Statements: By State

Prohibits state employee retirement system trustees from sacrificing investment returns or increasing risk to promote non-pecuniary interests,
including furtherance of social, political or ideological interests.

15

Measure

Description

Indiana
Attorney General Opinion, 9/1/22

Establishes that choosing investments for Indiana’s Public Retirement System on the basis of ESG considerations violates fiduciary duties.

Iowa
Governor Proposal, 2/15/23

Proposes that investment firms that manage the state’s money must not boycott fossil fuel energy or firearms companies, or generally invest funds
to further ESG, political or ideological interests over maximized returns.

KentuckyAttorney General Opinion, 5/26/22

Establishes that stakeholder capitalism and ESG investment practices are inconsistent with state law governing fiduciary duties owed byinvestment management firms to state public pension plans.

Louisiana
HCR 59, in effect 6/4/23

Requests U.S. Securities and Exchange Commission to withdraw proposed Climate Disclosure Rule.

HCR 110, in effect 6/7/23

Urges and requests state retirement system boards of trustees not to allow ESG policies to influence their investment decisions.

Mississippi
Treasurer letter to Public Employees’ Retirement
System Board Members, 11/14/22

Urges board to reject ESG policies and formally prohibit the use of nonpecuniary factors in investment policy.

MissouriHR 12, in effect 5/12/23

Urges the state and its executive officers, state agencies and officials to oppose (i) a forced imposition of ESG policies, (ii) costs on state citizens
related to the imposition of ESG policies, (iii) any action based on the assumption that net zero is likely to occur, (iv) any SEC regulations or otherclimate-related rules, (v) any private governmental agency discussion on climate-change risk and ESG policies and (vi) any policies of federalbanking regulators that require ESG to be used in the decision-making process.

15 CSR 30-51.170 6/1/2023 Amendment, in
effect 7/30/23*

Requires a broker-dealer or agent to disclose to a customer or potential customer the incorporation of any social objective or other nonfinancial
objective when buying or selling a security or commodity.

*Enforcement suspended as of 8/14/24

A trade association for broker-dealers, investment banks and asset managers filed a lawsuit on 8/10/23 against the Missouri Secretary of State andSecurities Commissioner, alleging that the amended 15 CSR 30-51.170 and 15 CSR 30-51.172 (below) violate federal laws. On 8/14/24, the court
entered a permanent injunction against the regulation.

Anti-ESG Resolutions / Policies / Statements: By State

16

Measure

Description

15 CSR 30-51.172 6/1/2023 Amendment, in
effect 7/30/23*

Requires investment advisers to disclose to a client or prospective client the incorporation of any social objective or other nonfinancial objective
when buying or selling a security or commodity.

*Enforcement suspended as of 8/14/24

A trade association for broker-dealers, investment banks and asset managers filed a lawsuit on 8/10/23 against the Missouri Secretary of State andSecurities Commissioner, alleging that the amended 15 CSR 30-51.170 (above) and 15 CSR 30-51.172 violate federal laws. On 8/14/24, the court
entered a permanent injunction against the regulation.

Montana
HJ 11, in effect 4/14/23

Joint resolution urging (i) state congressmen to compel the U.S. Senate Banking Committee, as well as the committees it oversees, to withdraw or
modify ESG investment policies for financial institutions and (ii) the state division of banking and financial institutions to avoid implementing
examination policies or guidelines beyond the scope of traditional “safety and soundness” risk assessments.

New Hampshire
Executive Order 2023-03

Establishes restrictions on ESG factors in state investments and associated reporting.

Utah
SCR 9, in effect 3/14/23

Encourages State AG to furnish legal advice to the State Treasurer and investment managers on various topics, to take legal action to protect thestate’s investments when necessary, to implement investment policies that restrict the use of ESG criteria, and to conduct audits of state
investments.

Attorney General Statement before the U.S.
House Committee on Oversight andAccountability, 5/10/23

Urges committee to undertake various ESG-related investigations, including on the role of proxy advisors and the U.S. Department of Labor 401(k)rule.

Virginia
Attorney General Opinion, 8/16/24

Anti-ESG Resolutions / Policies / Statements: By State

Advises that the Board of Trustees of the state retirement system has fiduciary duties requiring the board to base investment decisions on financial
considerations rather than ESG policies.

17

Measure

Description

Wyoming
State Treasurer’s Statement on its updated ESG
Policy, 5/3/23

Prohibits State Treasurer from considering factors that further social, political or ideological interests in state investment decisions.

002-4 Wyo. Code R. § 4-7, in effect 2/27/24

Requires a broker-dealer to disclose to a customer the incorporation of any social objective when buying or selling a security or commodity, or
when making recommendations to do so.

002-5 Wyo. Code R. § 5-7, in effect 2/27/24

Requires a securities agent to disclose to a customer the incorporation of any social objective when buying or selling a security or commodity, or
when making recommendations to do so.

002-10 Wyo. Code R. § 10-15, in effect 2/27/24

Requires an investment adviser to disclose to a customer the incorporation of any social objective when buying or selling a security or commodity,or when making recommendations to do so.

Anti-ESG Resolutions / Policies / Statements: By State

18

Anti-ESG Multi-State Initiatives
Initiative

Date

Description

Participating States

Attorneys General Letter toAsset Managers

8/29/24

Expresses concern that asset managers’ support of environmental
shareholder proposals recommended by Institutional Shareholder Services(ISS) may violate their fiduciary duties. Requests information on internal
processes surrounding review of shareholder proposals and exercise of voting
rights.

Alabama, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa,
Kansas, Louisiana, Mississippi, Missouri, Montana, Nebraska,
New Hampshire, North Dakota, Oklahoma, South Carolina,
South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia
and Wyoming (24 states)

State Treasurers Letter toFinancial Accounting Standards
Board

8/12/24

Argues that sustainability or GHG emissions reporting standards should not
be included in GAAP because such factors are not financially material.

Alabama, Alaska, Arizona, Arkansas, Idaho, Indiana, Iowa,
Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska,
Nevada, North Carolina, North Dakota, Oklahoma, South
Carolina, Texas and Utah (22 states)

Attorneys General Letter to
Department of the Treasury

8/1/24

Opposes the Department of the Treasury’s characterization of state “Fair
Access to Banking” laws, such as Florida’s HB 989, as harmful to national
security. Argues that such laws promote responsible money management andprotect consumers from discrimination.

Alabama, Alaska, Arkansas, Florida, Idaho, Indiana, Iowa,
Kansas, Louisiana, Mississippi, Missouri, Montana, Nebraska,
New Hampshire, North Dakota, South Carolina, Texas, Utah,
West Virginia and Wyoming (20 states)

Attorneys General Letter to Net
Zero Financial Service Providers
Alliance

9/13/23

Expresses concern that Net Zero Financial Service Providers Alliancemembers’ commitment to enforce a collective climate agenda may violate
state and federal law.

Alabama, Alaska, Arkansas, Idaho, Indiana, Iowa, Kansas,
Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska,
New Hampshire, Oklahoma, Ohio, South Carolina, Utah,
Virginia, West Virginia and Wyoming (21 states)

Republican Attorneys General
Letter to Fortune 100 CEOs

7/13/23

Argues that DEI policies violate federal law and urges CEOs to employ raceneutral principles in employment and contracting practices.

Alabama, Arkansas, Indiana, Iowa, Kansas, Kentucky,
Mississippi, Missouri, Montana, Nebraska, South Carolina,
Tennessee and West Virginia (13 states)

Attorneys General Letter toBlackRock Directors

7/6/23

Requests information about conflicts of interest analysis related to BlackRock
directors, in part resulting from ESG investing policies.

Alabama, Arkansas, Georgia, Iowa, Indiana, Kansas, Louisiana,
Missouri, Mississippi, Montana, New Hampshire, South
Carolina, South Dakota, Utah and Virginia (15 states)

Attorneys General Letter to largebank CEOs

5/19/23

Alleges inconsistency between (i) management recommendations on climaterelated shareholder proposals at the banks, and (ii) the banks’ past proxyvoting record in its asset management role.

Alabama, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa,
Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana,
New Hampshire, North Dakota, Ohio, South Carolina, Tennessee,
Texas, Utah, Virginia, West Virginia and Wyoming (23 states)

Anti-ESG Multi-State Initiatives

19

Initiative

Date

Description

Participating States

Attorneys General Letter to NetZero Insurance Alliance

5/15/23

Expresses concern that Net-Zero Insurance Alliance members’ commitment
to enforce a collective climate agenda may violate state and federal law suchas antitrust laws.

Alabama, Alaska, Arkansas, Georgia, Idaho, Indiana, Iowa,
Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana,
New Hampshire, Ohio, Oklahoma, South Carolina, South Dakota,
Texas, Utah, Virginia, West Virginia and Wyoming (23 states)

Attorneys General Letter toAsset Managers

3/30/23

Alleges that asset managers are in breach of their fiduciary duties relating to
the inclusion of ESG factors in managers’ investment decisions, and antitrust
violations implicated by their involvement in climate-related coalitions; someof these states have followed up with civil investigative demands seeking
information about the asset managers’ participation in the Net Zero AssetManagers initiative.

Alabama, Arkansas, Georgia, Idaho, Indiana, Iowa, Kansas,
Kentucky, Louisiana, Mississippi, Missouri, Montana, New
Hampshire, Ohio, South Carolina, Tennessee, Texas, Utah,
Virginia, West Virginia and Wyoming (21 states)

Governors’ Statement on AntiESG Investing

3/16/23

Forms an alliance to force change in the use of ESG factors in asset managers’
investment decisions and limit financial institutions’ ability to use social
credit scores, among others; the coalition has not taken any formal steps,
though various policy points are mirrored in anti-ESG legislation signed into
law in Florida, and Governor DeSantis made an anti-ESG platform part of his2024 presidential campaign.

Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Iowa,
Mississippi, Missouri, Montana, Nebraska, New Hampshire,
North Dakota, Oklahoma, South Dakota, Tennessee, Utah, West
Virginia and Wyoming (19 states)

Attorneys General Letter toCongress regarding the DOL
ESG Rule

2/14/23

Urges members of Congress to disapprove of the DOL’s ESG rule because therule allegedly violates federal law and threatens the financial stability ofAmericans who have invested in an ERISA plan.

Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana,
Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri,
Montana, Nebraska, New Hampshire, North Dakota, Ohio,
Oklahoma, South Carolina, South Dakota, Tennessee, Texas,
Utah, Virginia, West Virginia and Wyoming (27 states)

Attorneys General Lawsuit
against the DOL and theSecretary of Labor

1/26/23

Alleges that the DOL’s ESG Rule violates ERISA and the Administrative
Procedure Act. On 9/1/23, the federal district court for the Northern Districtof Texas upheld the ESG Rule. In response, the Attorneys General filed an
appeal.

Alabama, Alaska, Arkansas, Florida, Georgia, Indiana, Idaho,
Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri,
Montana, Nebraska, New Hampshire, North Dakota, Ohio, South
Carolina, Tennessee, Texas, Utah, Virginia, West Virginia andWyoming (25 states)

Attorneys General Letter to ISS
and Glass Lewis

1/17/23

Expresses concern that the firms, by advocating for and acting in alignment
with climate change goals, potentially violated their duties as proxy advisers,
and seeks responses to questions concerning how ESG considerations affecttheir proxy voting recommendations.

Alabama, Alaska, Arkansas, Georgia, Idaho, Indiana, Iowa,
Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana,
Nebraska, New Hampshire, Ohio, South Carolina, Texas, Utah,
Virginia and West Virginia (21 states)

Anti-ESG Multi-State Initiatives

20

Initiative

Date

Description

Participating States

Attorneys General Investigation
into large U.S. banks

10/22

Initiates a coordinated investigation by issuing civil investigative demands tothe six largest U.S. banks, seeking information relating to the banks’participation in global climate change initiatives such as the Net-Zero
Banking Alliance and the Glasgow Financial Alliance for Net Zero, based on
purported antitrust and consumer-protection concerns. Five states joined but
cannot be named due to state laws or regulations regarding confidentiality.

Arizona, Arkansas, Indiana, Kansas, Kentucky, Louisiana,
Mississippi, Missouri, Montana, Nebraska, Oklahoma,
Tennessee, Texas, Virginia and five other states that cannot be
named due to state confidentiality laws/regulations. (19 states)

Attorneys General Letter toBlackRock CEO

8/4/22

Criticizes BlackRock’s efforts to mitigate climate change and implies
BlackRock has violated its fiduciary duty of loyalty and care by not focusing
solely on financial returns.

Alabama, Arizona, Arkansas, Georgia, Idaho, Indiana, Kansas,
Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska,
Ohio, Oklahoma, South Carolina, Texas, Utah and West Virginia(19 states)

Attorneys General Letter to SEC
Secretary

6/17/22

Opposes the proposed SEC climate-related disclosure rule because the rule
allegedly exceeds the SEC’s scope of authority. The letter also argues that therule would significantly increase reporting burdens for registrants without
providing investors with any additional information that would help themevaluate the financial value of companies.

Alaska, Arkansas, Idaho, Indiana, Kentucky, Louisiana,
Mississippi, Missouri, Montana, South Carolina, Texas and Utah
(12 states)

Anti-ESG Multi-State Initiatives

21

Pro-ESG Laws: By State
Consideration of ESG Factors

StatuteDivestments/Investment Restriction

ESG-related Disclosures

Description

Exceptions / Notes

California
SB 54, in effect 1/1/24

ESG-related
Disclosures

Requires qualifying “venture capital companies” with ties to CA to annually
survey and report specified information relating to the diversity of thefounding and executive team members of business in which the company has
invested.3

Annual reports must be submitted by April 1, 2026 covering theperiod beginning January 1, 2025 (as amended by budget trailer
bill SB-164).

SB 253, in effect
1/1/24

ESG-related
Disclosures

Requires covered companies doing business in California to annually disclose
Scope 1, 2 and 3 emissions calculated in accordance with the Greenhouse Gas
Protocol standards and related guidance, beginning in 2026 (with assurance
requirements phased in).4

Funding for required rulemaking in order to implement SB 253
was confirmed in the final fiscal year 2024-25 budget. Proposedbill SB 219 extends the deadline for the state board to develop
regulations for reporting entities to July 1, 2025 among otherchanges.
Six business groups filed a lawsuit on 1/30/24 against the
California Air Resources Board (CARB) alleging that SB 253 andSB 261 (below) violate constitutional law. A hearing on a motion
for summary judgment and a motion to dismiss is currently
scheduled for 10/15/24.

SB 261, in effect
1/1/24

ESG-related
Disclosures

Requires covered companies doing business in California to biennially disclose
climate-related financial risk reports created in accordance with TCFD.5

Funding for required rulemaking in order to implement the law
was confirmed in the final fiscal year 2024-25 budget.
Six business groups filed a lawsuit on 1/30/24 against the
California Air Resources Board (CARB) alleging that SB 253(above) and SB 261 violate constitutional law. A hearing on a
motion for summary judgment and a motion to dismiss iscurrently scheduled for 10/15/24.

3

Please see our client memo for additional information.

4

Please see our client memo for additional information.

5

Please see our client memo for additional information.

Pro-ESG Laws by State

22

Statute
AB 1305, in effect
1/1/24

ESG-related
Disclosures

Description

Exceptions / Notes

Requires covered entities that market or sell voluntary carbon offsets, and/or
make claims of carbon reduction/removal within the state to disclose specified
information related to such offsets and claims.6

Although the bill did not have a clear implementation date, thebill’s sponsor, Assemblyman Jesse Gabriel, noted that his intent
was for reporting to begin January 1, 2025.
Proposed bill AB 2331, introduced on February 12, 2024, would
have clarified the reporting date of January 1, 2025 and exclude
renewable energy certificates from the definition of voluntarycarbon offset. The bill did not get a final vote before the end of
the legislative session so is not expected to pass this term.

SB 185, in effect
4/8/15

Divestments /Investment
Restriction

Prohibits boards of the California Public Employees’ Retirement System(CalPERS) and the California State Teachers’ Retirement System (CalSTRS)
from making new investments in thermal coal companies.
Requires boards to divest investments in existing thermal coal companies by
7/1/17, to report to the state legislature by 1/1/18 on divestment activities, andin conjunction with the California Environmental Protection Agency to reporton the feasibility of divesting from fossil fuel investments.

Colorado
SB 23-016, in effect
8/8/23

ESG-related
Disclosures

Requires public employees’ retirement system to provide annual report on
climate change risk assessments, anticipated impact on investment strategy,
use of climate-related reporting and actions taken to manage climate risk.

Annual reporting requirements begin January 1, 2025.

Requires certain insurers to participate in a climate risk disclosure survey.
FloridaHB 1331, in effect
7/1/24

6

Divestments /Investment
Restriction

Prohibits state agencies from procuring commodities produced in whole or inpart by forced labor. Requires state agencies to include statement informing
companies of requirements under this law in connection with any bidding,negotiating or contracting for the provision of commodities.

If there is reasonable and credible support for a company having
submitted a false certification, the DMS must investigate anddetermine whether the company should be placed on the forcedlabor vendor list (based on good cause and public interest). The
company must be given written notification and an
administrative hearing.

Please see our client memo for additional information.

Consideration of ESG Factors
Pro-ESG Laws by State

Divestments/Investment Restriction

ESG-related Disclosures23

Statute

Description

Exceptions / Notes

Prior to entering or renewing a contract with the state, requires a member ofthe vendor’s senior management to provide a written certification that to thebest of their knowledge, commodities to be procured by the state have notbeen produced, in whole or in part, by forced labor. A false certification canlead to a fine.
Requires the Florida Department of Management Services (DMS) to maintainand update quarterly a public list of vendors disqualified from state
contracting for connection with forced labor.
HB 7063, in effect
7/1/24

Consideration of ESG
Factors

Prior to entering or renewing a contract with any governmental entity,
requires nongovernmental entities to provide a signed affidavit attesting it
does not use coercion for labor or services that would amount to humantrafficking under state law (Section 787.06).

HB 2782, in effect
1/1/24

Consideration of ESG
Factors

Requires public entity investment managers to disclose any process throughwhich they integrate sustainability factors into investment decision-making,analysis, portfolio construction, diligence and investment ownership in orderto maximize risk-adjusted financial returns.

SB 2152, in effect
9/1/23

Consideration of ESG
Factors

Requires state pension board to publish its guidelines for voting proxy ballots
and a detailed report on its website describing how the board is considering
sustainability factors as defined in the state’s sustainable investing act (PA101-473 below).

SB 653, enacted
8/6/21

Consideration of ESG
Factors

Requires State Treasurer to develop, publish and implement an investment
policy covering the management of all state funds under its control. In
preparing the policy, State Treasurer must consider material, relevant anddecision-useful sustainability factors such as corporate governance andenvironmental and social capital factors.

PA 101-473, in effect
1/1/20Consideration of ESG
Factors

Requires state and local government entities managing public funds todevelop, publish and implement policies outlining how they consider ESG
factors in relation to their overarching goals of achieving sustainable returns.

Illinois

Consideration of ESG Factors
Pro-ESG Laws by State

Divestments/Investment Restriction

Does not apply to financial institution time deposits or processing
services.

ESG-related Disclosures24

Statute

Description

Exceptions / Notes

Requires entities to prudently integrate sustainability factors into investment
decision-making, investment analysis, portfolio construction, due diligenceand investment ownership.
HB 1471, enacted
7/12/19

Consideration of ESG
Factors

Identifies environmental and social considerations and governance policies as
one of many factors that a trustee managing a trust may consider in making
investment decisions.

Divestments /Investment
Restriction

Prohibits State Treasurer from investing in any prime commercial paper or
corporate bonds issued by a fossil fuel company.

Maine
HP 65 / LD 99, in
effect 10/18/21

Requires divestment of fossil fuel companies by state permanent funds held in
trust by employees retirement system to divest from the fossil fuel industry by
1/1/26, and specifically identifies the 200 largest public fossil fuel companies
as determined by carbon in their reserves.

Does not preclude de minimis exposure of funds.
Although the system is divesting from fossil fuel industries as
mandated by the law, it has expressed concerns of breaching its
fiduciary duty in connection with a complete divestment.

Requires the public employees retirement system board to annually report on
its ESG investment policy, including a disclosure of environmental
performance metrics of the board’s investments.
MarylandHB 740 / SB 566, ineffect 6/1/22

Consideration of ESG
Factors

Requires state retirement and pension board to consider climate risks in its
investment policy and associated with its portfolio across certain sectors andasset classes, to identify investment opportunities in certain energy sectors, todevelop a process to regularly assess certain impacts of climate risk, and toreport annually on climate risk levels across the portfolio.
Requires fiduciaries to consider systemic risks posed by climate change,
including monitoring net-zero aligned investments and climate solutions toensure a long-term sustainable portfolio.

Consideration of ESG Factors
Pro-ESG Laws by State

Divestments/Investment Restriction

ESG-related Disclosures
25

Statute
HB 1212, in effect
7/1/24

Description

Exceptions / Notes

Consideration of ESG
Factors

Requires the Executive Director of the State Retirement Agency to employ a
Director of Diversity, Equity and Inclusion who will, among other
responsibilities, develop and implement a Governance Program, monitor andevaluate risks and effects of material ESG factors on investments, integrateconsideration of material ESG factors into investment due diligence andrecommendations, and assist in identifying and recommending investment
opportunities.

Consideration of ESG
Factors

Allows trustees to engage in investing strategies that align with interested
persons’ social, environmental, or governance objectives or other values or
beliefs, regardless of investment performance.

Divestments /Investment
Restriction

Requires the Oregon Investment Council and the State Treasurer to ensure
the Oregon Public Employees Retirement Fund assets are not invested in any
thermal coal company or any fund containing a thermal coal company,
pursuing divestment and reinvestment of assets without monetary loss tofunds through investments in companies generating comparable returns tothose subject to divestment.

Divestments /Investment
Restriction

Prohibits a public entity from procuring a forced labor product (a productmade or including a component made using labor from a child or an adultobtained through the use of force or coercion) among other restrictions.
Requires a vendor submitting a bid or proposal to a public entity to certifythat the product is not a forced labor product.

New Hampshire
SB 49, enacted 7/1/21

Oregon
HB 4083, in effect
1/1/25Utah
HB 404, in effect
5/1/24

Consideration of ESG Factors
Pro-ESG Laws by State

Divestments/Investment Restriction

Does not apply if i) the public entity determines there are noother reasonable options for the procurement or ii) if the productor contract for the product was obtained or entered into before
May 1, 2024.

ESG-related Disclosures26

Pro-ESG Resolutions / Policies / Statements: By State
MeasureDescription

California
Public Employees’ Retirement System (“CalPERS”) initiatives,
adopted in 11/23

CalPERS adopted a sustainable investing strategy, including (i) increasing investments in climate solutions with a 2030 investment
target of $100B, (ii) engaging portfolio companies on net zero plans, (iii) developing a process to exit certain securities (i.e.
companies without credible net zero plans), (iv) integrating climate risk and opportunity assessment into investment decisions and(v) enhancing measurements and reporting of portfolio emissions.

Connecticut
State Treasurer’s Responsible Gun Policy, adopted and in
effect 12/3/19

Prohibits state retirement plans and trust funds investment in civilian firearm manufacturing companies.
Requests banks and financial institutions to disclose their gun policies to the Office of the Treasurer, and requires that office toconsider such policies when contracting for financial services.

Maryland
Building Energy Performance Standards (“BEPS”), in effect
1/1/24

Requires covered buildings that are 35,000 square feet or larger (excluding parking garage areas) to report GHG data, starting in
2025 and to meet specific targets related to GHG emissions and energy use intensity standards.

Massachusetts
PRIM Board proxy voting guidelines, in effect 3/1/22

Permits state pension funds to vote against directors at companies targeted by the Climate Action 100+, and vote on a case-by-casebasis on directors at companies not included on the Climate Action 100+ action list that have failed to align their business plans withthe goals of limiting global warming to 1.5 degrees Celsius, and/or that have failed to establish a plan to achieve net zero emissions by
2050.

NevadaTreasurer Announcement, 6/3/22

Pro-ESG Resolutions / Policies / Statements: By State

Announced state divestment from businesses that sell or manufacture assault-style weapons.

27

Measure

Description

New Mexico
Permanent Funds Environmental, Social, and Governance
Policy, approved by the New Mexico State Investment Council
in August 2021

Establishes guidelines for the incorporation of ESG considerations into state investment office and council state investment
management process.

New York
State Teachers’ Retirement System divestment, 12/28/21

Announced end to further investment in 20 oil and gas and thermal coal reserve holdings and divestment of $66 million of thermal
coal holdings.

State Pension Fund sets 2040 Net Zero Carbon Emissions
TargetNew York State Common Fund adopted a goal to transition its portfolio to net zero emissions by 2040, including (i) a review ofinvestments in energy sector companies, (ii) an assessment of transition readiness and climate-related investment risk and (iii)
divestment of companies that fail to meet minimum standards.

City Teachers’ Retirement System and City Employees’
Retirement System initiatives

2015 - divested from thermal coal
2017-2022 - conducted climate risk assessments and divested from fossil fuel reserve owners and increased investments in climate
solutions2021 - committed to reach net zero by 2040
2023 - announced four strategies whereby system will achieve net zero emissions by 2040: (1) disclose emissions and set interim
targets; (2) engage portfolio companies and asset managers to be net zero-aligned; (3) invest in climate change solutions and (4) divest
to reduce risk
In May 2023, four public employees sued the New York City Teachers’ Retirement System, Employees’ Retirement System and Boardof Education Retirement System for breaching their fiduciary duties in the process of divesting from fossil fuel companies. On August
7, 2023, the pension funds filed a motion to dismiss on the grounds that the decision will have no impact on the employees’ retirement
benefits, and the employees therefore lack standing.

City Board of Education Retirement System initiatives

Divested from fossil fuel reserve owners in 2021.
See discussion of lawsuit above.

OregonPro-ESG Resolutions / Policies / Statements: By State

28

Measure

Description

Investment Council approval of an amendment to the state
investment policy for Oregon Public Employees Retirement
Fund, 9/9/20

Formally integrates ESG factors into fund management policy.

Rhode Island
State Pension Initiative, in effect 1/22/20

Requires state investment commission to divest the public pension fund from companies that manufacture assault-style weapons forcivilian use or operate private for-profit prisons.

Texas
Teacher Retirement System Investment Policy Statement, in
effect 10/1/23

Pro-ESG Resolutions / Policies / Statements: By State

Formally incorporates ESG statement into investment policy.

29

Pro-ESG Multi-State Initiatives
Initiative

Date

Description

Participating States

Attorneys General Letter toCongress

12/14/23

Explains why fund managers’ use of ESG factors is consistent with prudent
investment decision-making.

Arizona, California, Colorado, Connecticut, DC, Delaware,
Illinois, Maine, Maryland, Massachusetts, Minnesota, New
Jersey, New York, Oregon, Pennsylvania, Vermont, Washington
and Wisconsin (18 states)

Democratic Attorneys General
Letter to Fortune 100 CEOs

7/19/23

Expresses view that corporate efforts to recruit diverse workforces and create
inclusive work environments are legal and in fact reduce legal risk for claimsof discrimination.

Arizona, California, Colorado, Connecticut, Delaware, DC,
Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan,
Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon,
Rhode Island, Vermont and Washington (21 states)

Attorneys General Letter to
Senate Committee on Banking,Housing, and Urban Affairs

11/21/22

States that ESG factors in investment decisions are like any other material
factors that inform investment decision-making.

California, Connecticut, Delaware, DC, Illinois, Maine, Maryland,
Massachusetts, Minnesota, Nevada, New Jersey, New Mexico,
New York, Oregon, Rhode Island, Washington and Wisconsin (17states)

Attorneys General Letter to SEC
Secretary

8/16/22

Expresses support for the proposed Certain Investment Advisers andInvestment Companies about Environmental, Social and Governance
Investment Practices Rule in light of investors’ need for consistent,
comparable and reliable information on ESG-based investment products andstrategies.

California, Delaware, Illinois, Maryland, Minnesota, New Jersey
and New York (7 states)

State Treasurers’ Public Letter

9/14/22

Argues signatories’ opposition to state efforts to ban the use of nonpecuniary
factors in investment decisions.

California, Colorado, Delaware, Illinois, Maine, Massachusetts,
Nevada, New Mexico, New York City, Oregon, Rhode Island,
Vermont, Washington and Wisconsin (14 states/cities)

Pro-ESG Multi-State Initiatives

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