FRANKFORT, Ky. (May 26, 2022) – Kentucky State Treasurer Allison Ball requested an opinion from the Attorney General regarding whether “stakeholder capitalism” and Environmental, Social, and Governance (ESG) investment practices in connection with the investment of public pension funds are consistent with Kentucky law governing fiduciary duties. ESG practices replace traditional pecuniary analyses with subjective and political evaluations of investments. The Attorney General found that ESG investment practices are not consistent with Kentucky law.
“Kentucky should not be the laboratory for stakeholder capitalism and ESG practices. These dangerous policies place political agendas ahead of fiscal priorities and would be at the detriment of pensioners and our Commonwealth,” Treasurer Ball said. “The findings of the Attorney General outline the explicit duty of Kentucky’s pension managers to maximize shareholder value rather than fold to leftist political pressure.”
The Attorney General found that Kentucky law makes it clear that investment managers “must be single-minded in their motivation and actions and their decisions must be “[s]olely in the interest of the members and beneficiaries [and for] the exclusive purpose of providing benefits to members and beneficiaries,” KRS 61.650(1)”
The Kentucky State Treasurer is an ex-officio member of the Teachers’ Retirement Systems Board of Trustees. She has testified before the Kentucky General Assembly, penned a letter to the Biden Administration, and joined numerous state officers around the country on multiple occasions admonishing ESG investment practices as arbitrary and dangerous.