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Indiana House Passes Anti-ESG Pension Fund Bill


By Linnea Lueken, The Heartland Institute

The Indiana House passed a bill that would prevent the investment of state pension funds in Environment, Social, and Governance (ESG) portfolios, and require the investments are made for financial benefit of the employees. The state Senate previously passed the measure, which now goes to Gov. Eric Holcomb, who is expected to sign it into law.

House Bill 1008 would prevent the Indiana Public Retirement System from using ESG-committed financial portfolio service providers, particularly if they prioritize nonfinancial purposes over pension returns.

The bill states ESG priorities focused on “eliminating, reducing, offsetting, or disclosing greenhouse gas emissions,” and divestment from companies that fail or refuse to commit to “environmental disclosures” or engage with fossil fuel energy, mining, agriculture, livestock and food animal farming, and timber harvesting, are at odds with the fiduciary duties of the pension board.

If these industries and others that commonly run afoul of ESG prioritization are targeted by asset managers, and there is no obvious financial benefit to the pension fund itself, the state treasurer is instructed to compile a report to the state board, so they can replace that service provider with another that promises to focus its investment strategies strictly on financial performance.

The bill makes it clear that if no suitably profitable replacement is available, the board can keep contracting with the ESG-focused financial service provider.

Pensions Shouldn’t Be Guided by Politics

The state’s pension funds should not be used to push political viewpoints, especially when the targeted industries are important to Indiana’s economy state Rep. Ethan Manning (R-Logansport), the author of the bill, said in a press release.

“Companies managing Indiana’s pensions should not boycott industries that are critical to Hoosiers, such as agriculture, fossil fuels, and more,” said Manning. “These types of industries are vital to Indiana’s economy and security.”

‘Degraded by Powerful Banking Lobbyists’

The bill is not quite as strong as originally intended, going through rewrites as major banks and chambers of commerce pushed back.

There is still hope that future bills could re-strengthen this amendment, says Jack McPherrin, research editor and fellow at The Heartland Institute.

“Though Indiana’s attempts to enact anti-ESG legislation have unfortunately been degraded by powerful banking lobbyists—which has translated into a much watered-down bill—this bill’s passage is still a step in the right direction to counteract ESG’s insidious influence,” McPherrin said. “Hopefully, Indiana legislators, and lawmakers from other states, can improve upon this bill in future legislative sessions.”

Indiana is not the only state that saw anti-ESG bills passing in recent months. Florida Gov. Ron DeSantis signed a similar bill into law, prioritizing fiduciary concerns over ESG considerations. These kinds of bills should be used as examples for other states to follow, says McPherrin.

“Still, the bill’s passage should be seen as a victory amid the torrent of anti-ESG proposals being proposed and enacted in conservative states across the nation,” said McPherrin. “Florida’s comprehensive anti-ESG legislation should be used as a template for any state that wishes to truly protect its economy and its citizens from ESG’s negative impacts.”

Environmental Activism in a Coal State

Although HB 1008 is not quite as strong as it could have been, it is still a move in the right direction, says Cameron Sholty, government relations director at The Heartland Institute.

At the very least, it sends a chilling message to financiers who might wish to target Indiana industries in pursuit of ideologically driven environmental action, said Sholty.

“While entrenched interests were able to cast aspersions on certain provisions and entangle it in bureaucratic processes and analyses, ultimately, what became law is a win for the state’s hardworking pensioners, taxpayers, and domestic industries,” Sholty said. “It sends a strong message to global financial interests deigning nods to environmental activism that they have no place in the investment and retirement security of Hoosier Staters.”

Indeed, Indiana’s major exports are motor vehicles, automotive parts, and industrial machinery, which rely heavily on fossil fuels. Additionally, Indiana is among the top ten coal producing states—an industry that is spurned by ESG-focused institutions.

Domestic industries like these should not be sacrificed by asset managers in order to favor the ‘E’ of ESG, nor should activist positions take priority over financial performance, says Sholty.

“The process, the advocacy, and the opposition to Indiana’s new law are good lessons for lawmakers in other states who wish to—and should—favor domestic industries and prioritize pecuniary interests over environmental activism,” Sholty said.


Linnea Lueken ( is a research fellow with the Arthur B. Robinson Center on Climate and Environmental Policy at The Heartland Institute.