HB 1307: Arkansas Requires Public Entities to Divest from Financial Service Providers that Use ESG Metrics
Summary
HB 1307 was passed in March 2023 and requires the state treasurer to maintain a public list of financial service providers that are identified by the ESG Oversight Committee to discriminate against energy or firearms entities or otherwise use environmental, social justice, or governance-related (i.e., nonpecuniary) factors in their decision-making. Entities identified by the committee will receive a written notice and must demonstrate that they are not discriminating against these entities to avoid being added. Further, the law provides that the state treasurer, along with state and local government entities, must divest all direct or indirect holdings with these providers within a certain timeframe after they are added to the list.
The law defines "discriminate" to include refusing to engage in the trade of any goods or services or terminating an existing business relationship with an entity based on the fact that it is in the energy, fossil fuel, firearm, or ammunition industry. Discrimination "does not include actions by an investment adviser according to the investment-related guidelines, policies, or preferences of its clients."
This law was amended in April 2023 by HB 1845, which now requires the Arkansas ESG Oversight Committee, rather than the state treasurer, to maintain the list of financial service providers.
