Virginia House Bill HB2335

Virginia 2023 Regular Session

• Introduced: 1/12/23
• Refer: 1/12/23

Caption

Virginia Retirement System; investments, environmental, social, and governance investing restricted.

Impact

If enacted, HB2335 will alter the state laws governing how the Virginia Retirement System makes its investment decisions. It supports a more conservative investment strategy that prioritizes financial performance over social considerations. The bill applies to investments of state funds made after July 1, 2023, thereby establishing a significant shift in the fiduciary standards that the Board must adhere to when managing public funds.

Summary

House Bill 2335 addresses the investment policies of the Virginia Retirement System, specifically restricting the Board's ability to consider environmental, social, and governance (ESG) factors when making investment decisions. The bill emphasizes that investments should solely aim for maximum financial returns unless it can be demonstrated that a social investment outperforms a similar non-social investment. This change signifies a more traditional approach to fiduciary responsibilities, focusing on financial yields over socially responsible investments.

Contention

The bill has sparked debates about the role of public pension funds in addressing social and environmental issues. Proponents argue that the law will prevent the politicization of investment strategies and protect beneficiaries from potential losses associated with socially motivated investing. Conversely, opponents contend that the bill undermines the ability of public funds to contribute positively to social causes and promote corporate accountability through responsible investment practices.