HB 236: Kentucky Requires Pension Investments Based Solely on Pecuniary Factors, Not ESG Interests
Summary
HB 236, enacted in March 2023, requires pension fiduciaries to base investment decisions solely on pecuniary factors. Pecuniary factors are defined as factors that have a material connection to the financial risk or return of an investment. Further, a nonpecuniary interest is identified as an "environmental, social, political, or ideological interest which does not have a direct and material connection to the financial risk or financial return of an investment." The law also requires the boards of several state systems to adopt written proxy guidelines consistent with the fiduciary duties and that shares be voted in accordance with those guidelines.HB 236, enacted in March 2023, requires pension fiduciaries to base investment decisions solely on pecuniary factors. Pecuniary factors are defined as factors that have a material connection to the financial risk or return of an investment. Further, a nonpecuniary interest is identified as an "environmental, social, political, or ideological interest which does not have a direct and material connection to the financial risk or financial return of an investment." The law also requires the boards of several state systems to adopt written proxy guidelines consistent with the fiduciary duties and that shares be voted in accordance with those guidelines.
