State Sen. Jim Runestad wants to ensure folks managing public pensions in Michigan don’t “prioritize woke politics over fiscal prudence and investment returns.”

The White Lake Republican seeks to limit Environment, Social, and Governance, commonly referred to as ESG, considerations when making public pension investments.

“Thousands of Michiganders rely on their public pension for security in retirement. They’ve entrusted the state to manage those investments, and it ought to be criminal for liberal pension boards to prioritize woke politics over fiscal prudence and investment returns,” Runestad said in a statement.

“These bad actors are putting hardworking people’s comfortable retirement beneath their own desire to advance liberal ideologies,” he said. “They try to justify their agenda by calling it ‘ESG’ investing for the environmental, social and governance nonsense that it represents, but I call it what it really is: ‘financial DEI,’” referring to diversity, equity, and inclusion.

Runestad introduced Senate Bill 300 on Thursday to amend the state’s Public Employee Retirement System Investment Act to prohibit investment strategies based on noneconomic, nonfinancial, social, political or ideological objectives.

The legislation marks Runestad’s second attempt to mandate the state’s retirement systems “consider only pecuniary factors in the evaluation of an investment.” Runestad introduced the same legislation in 2022, and it gained approval from the Senate Committee on Finance, but never cleared the upper chamber.

That legislation was inspired by a resolution at Michigan State University that would have called on companies doing business with the school to oppose the Secure MI Vote ballot initiative, which focused on enhancing the state’s voter ID law.

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Pension experts and public policy leaders are voicing support of Runestad’s SB 300, including the Mackinac Center for Public Policy, the Reason Foundation’s Pension Integrity Project, Heartland Impact, the American Energy Institute, and Americans for Tax Reform.

“Michigan’s pension managers should be focused on investment returns and not playing political games with retirement funds, especially since the state already has more than $30 billion in pension debt,” James Hohman, MCPP director of fiscal policy, said in a statement. “So-called ESG investment strategies are unnecessary distractions from the purpose of public pension systems and can mean lower returns.”

Pension Integrity Project Director Zachary Christensen argues public pension managers should focus solely on “their core duty of maximizing investment returns to provide workers with retirement benefits they’ve been promised while minimizing financial risks for taxpayers.

“The modern guardrails and reporting standards in this bill can significantly strengthen these vital systems,” he said.

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Jason Isaac, who testified on issue before Congress on behalf of the AEI, argued Runestad’s bill “rightly restores fiduciary duty to its original, lawful purpose.”

“Michigan retirees deserve protection from the woke financial activism that is threatening the integrity of pension systems across the country,” said Isaac, AEI’s CEO. “The American Energy Institute commends Sen. Runestad for introducing legislation that restores financial integrity to Michigan’s public pension systems.”

The legislation is among the latest in what’s been a push in recent years by many states to block the use of environmental, social and governance factors for asset managers and pension officials responsible for government investment plans.

“This increase in anti-ESG legislation was driven in part by the U.S. Department of Labor’s adoption of a regulation (in 2022) that expressly permits fiduciaries of (certain) retirement plans to consider climate change and other ESG factors in investment selection, and in part, by the enactment of legislation in blue states to divest their retirement plans from certain industries like fossil fuel and firearms,” according to one Harvard University study.

Michigan Congressman Bill Huizenga, R-Zeeland, introduced the Prioritizing Economic Growth Over Woke Policies Act to address the same issue on the federal level last year. The bill cleared the lower chamber on a vote of 215-203 before it ultimately died in the Senate.

“There’s been a sad trend of progressive activism taking hold in corporate boardrooms and public institutions across the country. But public boards have a duty to protect funds promised to retirees. They shouldn’t be gambling with public money on the always-spinning roulette wheel of dizzying wokeism,” Runestad said.

“It’s time to stop playing politics and start keeping promises when it comes to public pensions,” he said. “My bill will protect these funds from bad board actors and their terrible, politically motivated ideas.”