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Minutes for SB291 - Committee on Federal and State Affairs
Short Title
Enacting the Kansas public investments and contracts protection act concerning environmental, social and governance (ESG) criteria, prohibiting the state and political subdivisions from giving preferential treatment to or discriminating against companies based on such ESG criteria in procuring or letting contracts, requiring KPERS fiduciaries to act solely in the financial interest of the participants and beneficiaries of the system, restricting state agencies from adopting ESG criteria or requiring any person or business to operate in accordance with such criteria, directing registered investment advisers to provide ESG criteria notice to clients and providing for enforcement of such act by the attorney general.
Minutes Content for Tue, Mar 7, 2023
Jason Long, Office of the Revisor of Statutes, gave an overview of SB291, which creates the Kansas Public Investments and Contracts Protection Act. Generally, the Act would prohibit the use of environmental, social, and governance (ESG) criteria by the State, and provides for transparency for individual investors about investments they may make in ESG funds. (Attachment 1)
The Chairman called for oral proponent testimony.
Oral Proponent Testimony
Kris Kobach, Attorney General, spoke as a proponent of the SB291. He stated the state has a fiduciary duty to use KPERS (Kansas Public Employee Retirement System) funds to maximize yield, and the return on ESG funds is typically "dismal compared to other funds". He said investment options are being taken off the table if they don't meet ESG criteria, such as, the company doesn't adopt racial and gender quotas, reduce their carbon footprint, or succumb "to the woke social justice fad of the month". He stated we should allow KPERS to invest in all investment options to maximize return. He indicated the need for a new section in the bill that refers to investment advisors getting informed consent from their clients before investing in ESG funds. That provision is in SB224. (Attachment 2)
Steven Johnson, Kansas State Treasurer, spoke as a proponent of SB291. He stated the treasurer has a fiduciary role, and his office is seeking the highest return based on risk. "When money managers insert their own policy into what is invested, the line gets blurred." He explained proxy voting, whereby corporate governance is voted on at annual meetings, and someone votes the shares for the investors. He wants to make sure the votes are being made in Kansas' best interest. (Attachment 3)
The Chairman opened for questions of Mr. Kobach and Mr. Johnson. Seeing no more questions, proponent testimony continued.
Representative Michael Murphy spoke as a proponent of ESG legislation, favoring the language in SB224. He gave a primer on ESG and it's history, and explained that it is "political policy", and should be taken out of the free market. He said the legislation in SB224 and SB291 is simply an effort to thwart the power of the purse held by huge financial organizations to protect the rights of Kansans. (Attachment 4)
Dr. William Happer, physicist, and Professor Emeritus at Princeton University, spoke as a proponent of ESG legislation. He stated SB224 or SB291 would bring major benefits to Kansans. The focus of his testimony was on the parts of ESG standards that aim to stop the use of, and investment in fossil fuels. He stated too many people have been misled to this that the carbon dioxide gas emitted when fossil fuels are burned, is a "pollutant". He stated the opposite is true, and rather, carbon dioxide is the "gas of life, and without it, plants and other life would die". His testimony included technical physics explaining his position, and he concluded by stating, "unequivocally, there is no climate crisis. ESG efforts to suppress the use of fossil fuels will be all pain and will cause enormous environmental and economic damage". (Attachment 5)
Dana Wreath, Executive Vice President, Berexco,LLC, and chair-elect of Kansas Independent Oil and Gas Association, spoke in "general support of SB291 and what it tries to achieve. He spoke on both the direct and indirect impacts on the oil and gas industry and the effect on Kansas economy from ESG. He stated large companies they do business with have been deprived of capitol, and that effects the Kansas oil and gas producers. These producers are using products from high tech companies that need access to those funds, such as billions of dollars of capital being needed for steel production, which is used for pipelines. This in turn drives up costs across the state for citizens. (Attachment 6)
Written Only Proponent Testimony
Ed Cross, President, Kansas Independent Oil and Gas Association (Attachment 7)
Eric Bledsoe, Visiting Fellow, Opportunity Solutions Project (Attachment 8)
Jannel Munk, private citizen (Attachment 9)
Bette Grande, Policy Director for WallBuilders ProFamily Legislative Network (Attachment 10) (Attachment 11)
The Chairman opened for a period of questions and answers.
Seeing no more questions, the Chairman closed the hearing and meeting at 11:26 am.
