A controversial law blocking financial services providers that offer socially and environmentally conscious investment options from doing business with the state will be a key issue in the Arkansas treasurer race this November.
Arkansas is one of a number of red states (including Texas, Oklahoma and Kentucky) to pass what’s known as anti-ESG legislation that restricts which banks can manage state and local government investments. ESG refers to environmental, social and governance practices that take into consideration a company’s environmental and social impact.
ESG is used in investment strategies that consider business risk related to climate change, international conflict or sustainability, for example. It’s a concept that conservatives have conflated with “woke” liberal politics. The right has also viewed ESG as a tool to impose more climate regulations on the oil and gas industries, another motivation for conservatives to diminish its influence.
Studies are emerging that show such anti-ESG policies cost local governments more money and are resulting in millions in losses for some states. There is also concern that, long-term, the laws could curtail investment in the states that have passed them, according to analysts.
John Pagan, the Democratic candidate running against Republican John Thurston, who is currently serving as Arkansas secretary of state, said the Arkansas anti-ESG law, Act 411, is “short-term thinking” and will “damage the state’s economy.” Pagan, a former Harvard-educated law professor, also said he thinks the law is unconstitutional and if he wins the treasurer’s race this fall he would encourage restricted financial institutions to sue to get it overturned.
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Publish date : 2024-08-29 04:07:00
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