KPERS Claps Back Against GOP 'Anti-ESG' Bill With Warning Of Financial Risk

From both the progressive & conservative perspective . . . Politically satisfying power moves don't often make good policy. 

Accordingly . . .

We appreciate this recent report documenting objections by Kansas Public Employees Retirement System (KPERS) against a recent GOP crusade. 

From our vantage . . . 

We don't really have a dog in this fight but no . . . KPERS isn't "woke" and they are VITAL to the economy of Kansas . . . Given the BILLIONS in funds they manage . . . We tend to trust their analysis and this quote makes a great deal of sense . . . Check-it . . .

"KPERS objected to the bills as both unnecessary and costly. The bills are unnecessary, according to KPERS, because (1) as fiduciaries, members of the KPERS Board and its investment managers are already duty-bound to make “[a]ll investment decisions . . . for the sole purpose of providing promised benefits”—an obligation that the proposed bills could disrupt; and (2) an existing Kansas law, in operation since 1992, already prohibits investments “if the sole or primary investment objective is for economic development or social purposes or objectives.” More critically, under either of the bills, all or nearly all of the current KPERS investment managers would be disqualified because they offer ESG products, resulting in a complete divestment and restructuring of the KPERS fund. Such a restructuring would lead to “asset losses of approximately $1.14 billion due to the early sale of assets from illiquid investments” and would reduce future returns by an estimated 0.85%, resulting in a $3.6 billion reduction in fund earnings over the next 10 years. This underfunding would in turn cost state and local employers billions of dollars in the form of higher mandated contributions. Finally, by restricting the ability of KPERS to delegate its proxy voting rights unless it is not “economically practicable,” and the investment manager commits in writing to “act solely on pecuniary factors” (a term not defined in the bills), the bills would require KPERS “to research and evaluate each of the nearly 100,000 proxy votes based solely on financial factors,” meaning that “an entire team of investment professionals would have to be hired to manage proxy voting." That, in turn, would “create an unnecessary layer of bureaucracy that will make KPERS less competitive with private market and real estate investments.”

Read more via www.TonysKansasCity.com link . . .

JD Supra: Kansas Public Employees Retirement System Warns of Adverse Consequences From “Anti-ESG” Bills