by Daniel Elliot

In my first couple of weeks as Indiana’s State Treasurer, I supported House Bill 1008, which was designed to protect Indiana’s pensioners from Environmental, Social, and Governance (ESG) related investment practices. ESG is a concept that says climate change, social concerns, and political issues should be used alongside financial considerations in banking and investing decisions. HB 1008 ensures that Indiana’s policy for investing in our pensioners will be focused on pecuniary interests and Indiana retirement investment managers wouldn’t work with fund investors who use any non-financial factors in their decisions. Put plainly: Indiana would invest in what gives our retirees the best rate of return.

I thought my stand would be non-controversial. What was perplexing to me was the pushback from special interest groups, especially as I started asking about our Indiana Public Retirement System (INPRS). But what I’ve learned during my time in local government is that if people tell you there is “nothing to see here,” then you should start looking.

Do ESG factors effect returns on investments? Yes! If a fund manager used ESG factors in making investment decisions, they generally had a return of 6.3 percent in the last decade. If they used only financial factors to make decisions, like continuing to invest in fossil fuels, the rate of return equaled about 8.9 percent over the same time period.

Does Indiana use asset managers that get involved with politically-motivated initiatives? A quick look finds that $16.667 billion of the $45 billion in total dollars managed by INPRS is with fund managers that have either joined the Net Zero Asset Managers or the Climate Action 100+ initiatives.

Some  claim that it would be an extremely burdensome cost to push back against these big asset managers. They threw around a questionable $6.7 billion fiscal impact as a criticism without actually giving any details. First, that number was predicated on what I call a “Red Dawn” situation. (For the Gen Z folks in the room, this was a 1984 movie where Russia invaded the continental United States.) While a fun movie, the premise was logically and militarily  impossible. Similarly, the fiscal premise that every asset manager would suddenly cease to do business with the state of Indiana is  illogical. Our public retirement system is one of the best-run and well-funded retirement systems in the country. There will always be asset managers willing to work with Indiana. A more recent fiscal analysis on HB 1008 found zero cost associated with the bill. Yet, many articles and special interest groups still reference that $6.7 billion fiscal impact. Why reference outdated data when newer numbers from the same agency are available? Protecting Indiana’s public retirement system would not cause an appreciable increase in costs to retirees or to Hoosier taxpayers. The data backs it up.

In the end, my responsibility is to Indiana taxpayers and to the beneficiaries of our public retirement system. I never want retirees who have worked for our state or local governments to have to choose between paying for a mortgage or medicine. The best way to ensure  they are never faced with that choice is to make the best financial decisions possible. Any time we let ESG considerations overrule sound financial principles, we endanger Indiana’s investments. I will continue to fight for what is in the best financial interest of our State’s investments, even if that means asking uncomfortable questions and fighting powerful organizations on behalf of Hoosiers.


Daniel Elliott is the Indiana State Treasurer.