Governance (potentially) off the table in New Hampshire

Three Republican representatives have proposed a bill that would prohibit the New Hampshire Retirement System (NHRS) from investing with firms that consider environmental, social and governance criteria within the investment process. Unlike existing anti-ESG legislation in other US states that targets investment decisions made solely on ESG grounds, this bill focuses on the mere consideration of ESG criteria as part of the decision-making process.

Since all PRI signatories commit to incorporating ESG issues into investment analysis and decision-making, the bill – if enacted – would effectively block NHRS from investing with any PRI signatory or any product covered by a signatory's responsible investment policy. Even basic consideration of governance at portfolio companies, long a standard part of investment due diligence, could expose NHRS staff to prison sentences of one to twenty years.

At NorthPeak Advisory we believe much of the existing anti-ESG legislation is based upon a misunderstanding of the role ESG information plays in the investment process. We firmly believe in the need for asset owners and asset managers to invest in alignment with fiduciary duty, maximising financial returns while minimising risk, and reject the idea that appropriately assessing financially relevant ESG information could ever constitute a breach of that duty.

Get in touch at info@northpeakadvisory.com if you would like to discuss this in more depth.