Virginia attorney general denounces ESG investments in state retirement fund

Virginia's attorney general has advised officials from the state’s retirement system against making investment decisions that prioritize environmental issues, social issues and corporate governance, according to a nonbinding legal analysis released Friday.

Jason Miyares, a Republican who serves as Virginia’s top prosecutor, said in an advisory opinion that the board of trustees for the Virginia Retirement System should instead make investments “based on securing the best financial results for VRS beneficiaries.” The retirement system's members include state employees, public school teachers and employees of political subdivisions, such as counties, towns and cities.

“Investments must be driven by careful, calculated financial foresight, not clouded by unfounded ESG fads,” Miyares said in a statement. “This Opinion firmly reinforces the Virginia Retirement System’s responsibility and legal obligation to make objective investment decisions free from the sway of social or political agendas. Secure futures require sound economics.”

Miyares’ advisory opinion, written at the request of Republican Del. Nick Freitas, comes after some state pension programs have opted to prioritize environmental, social and corporate governance policies when making investments, also known as ESG investing.

Virginia Sowers, a retirement system spokesperson, said in an email that the retirement system does not have a policy to prioritize such investments.

“To meet its fiduciary duty, VRS carefully analyzes economic factors and assesses monetary risk to achieve the highest level of return for a given level of risk over the long term,” Sowers said. “This analysis does not include reviewing investments through a ‘social screen,’ nor does VRS deploy dedicated ESG funds in its retirement plans.”

States such as Illinois and Maryland are required to consider sustainability and climate risks in their asset-related decisions. In Maine, the state’s pension fund is required to divest from fossil fuels by 2026, according to a policy passed in 2021.

Other states such as Florida, Indiana and Kansas, among others, created legislation against ESG investing.

In Virginia, legislators considered a 2022 bill requiring the retirement system to divest from fossil fuels, though it did not become law. Another 2023 bill that would restrict investments based on environmental and political factors did not pass.

Friday’s release was Miyares’ 10th opinion memo in 2024. Opinions by the attorney general give legal advice but are not binding on the courts.

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Olivia Diaz is a corps member for The Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.