Hobbs Vetoes Carroll’s ESG Bill

June 20, 2023

By Daniel Stefanski |

Arizona Governor Katie Hobbs’ historic veto streak has uncovered another disappointed legislator.

On Monday, Republican Senator Frank Carroll issued a press release to highlight Governor Hobbs’ veto of his bill, SB 1500, “which would have empowered (the) Arizona State Treasurer to eliminate environmental, social, and governance (ESG) consideration from all state investments by requiring investments be made in the sole interest of the taxpayer.”

Hobbs justified her reasoning for the veto in a customary letter to the Arizona Senate President, writing, “Politicizing decisions best made by the state’s investment professionals can harm our state’s long-term fiscal health.”

Senator Carroll was unhappy with the governor’s action on his proposal, saying, “My interest is in protecting taxpayer dollars and protecting pensions. I sponsored this bill to get politics out of the pensions of public employees and public officials who have earned the right to financial stability after dedicating their lives to public service. By definition, pecuniary means, ‘relating to or consisting of money.’ That is the criteria by which taxpayer dollars should be invested, not a social system used to push political agendas.”

The lawmaker’s release further explained why SB 1500 would have been so important for Arizona, stating, “An investment evaluation, conducted by the State Treasurer, must be based on financial and economic factors, and not to promote nonpecuniary benefits, other nonpecuniary social goals or take unnecessary investment risks. This bill aimed to protect government employees who pay into a retirement fund, where that money is then invested by the State Treasurer. The growing practice of ESG policies being imposed on companies is cause for concern, as it deviates from typical investing and business practices to consider non-financial information about a company, and ultimately prioritizes liberal ideology and goals over investor returns.”

SB 1500 was first passed by the Senate on February 28 with a 16-14 vote after clearing the Government Committee earlier in the month 5-3. When the bill was transmitted to the House of Representatives, it first obtained approval from the Government Committee before receiving the green light from the full chamber with a 31-27 vote (one member not voting and one seat vacant).

Senators Ken Bennett, David Gowan, Sine Kerr, Janae Shamp; and Representatives Michael Carbone, Neal Carter, Tim Dunn, Teresa Martinez, Quang Nguyen, Austin Smith, and Justin Wilmeth co-sponsored the legislation.

Representatives from the Climate Cabinet Action, Sierra Club – Grand Canyon Chapter, and the Arizona Association of Counties expressed opposition to the bill as it made its way through the legislative process.

The governor’s veto continues an abrupt shift in state policy over the ESG issue, which has largely devolved into a Republican versus Democrat fight. Prior to 2023, Arizona had two statewide officials, who were extremely active in fighting back against the ESG movement with former Attorney General Mark Brnovich and Treasurer Kimberly Yee.

However, the transition of power in the Arizona Attorney General’s Office halted Brnovich’s investigative efforts into this movement. Kris Mayes, Arizona’s new top prosecutor, stopped an ongoing investigation from her predecessor, saying, “corporations increasingly realize that investing in sustainability is both good for our country, our environment, and public health and good for their bottom lines. The state of Arizona is not going to stand in the way of corporations’ efforts to move in the right direction.”

But State Treasurer Kimberly Yee continues to be an active opponent of ESG. Her office took several positions and actions against ESG during her first term, including revising the Arizona State Treasurer’s Office Investment Policy Statement to ensure that the Office “investments are not subject to the subjective political whims of the ESG standards.” Yee stated, “This is about maintaining American free-market principles that our country was founded upon and not allowing environmental or social goals to dictate how taxpayer monies are managed.”

Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.

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