Arkansas State Capitol Brian Chilson

A new bill filed would force all public entities in Arkansas to divest from investments from a financial services provider that invests with environmental, social and governance considerations. ESG funds, which appeal to investors who are leery of putting their money into, say, gun manufacturers or oil companies, have become very popular in recent years.

From Senate Bill 41, sponsored by Sen. Ricky Hill (R-Cabot) with a host of co-sponsors:


(2) The energy, fossil fuel, firearms, and ammunition industries have been discriminated against at the national level;

(3) In order to be successful in the energy, fossil fuel, firearms, and ammunition industries, these businesses rely on the provision of Arkansas goods and services;

(4) Certain government regulators are using their regulatory power over the banking and financial systems to drive political agendas which distort limited government, free market, and free speech principles;

(5) Rulemaking, regardless of asset thresholds, has a real risk of impacting smaller financial services providers;

(6) Certain states are interfering in the free market by encouraging or discouraging lending to politically favored or disfavored industries to the detriment of taxpayers.

The bill would require the state treasurer and all public entities to divest from securities if a financial service provider “discriminates without a reasonable business purpose” against companies involved in the energy, fossil fuel, firearms, or ammunition industries or investments based on the use of environmental, social justice, or other governance-related factors.”

Public entities include cities, counties, school districts and public universities. I suspect it would also include the massive public employee and teacher retirement systems.


I’m curious about the practical impact of this. Surely most if not all of the major financial service providers have ESG funds. Not because corporate America is “woke,” but because they’re in the business to make money and there are an increasing number of folks in the marketplace who want these products. Would the consequence of this bill be that state entities have to move away from successful, reputable financial firms? I look forward to the experts weighing in.

This is a trendy area for Republican lawmakers. I wouldn’t be surprised if we see a similar bill that requires state contractors to pledge not to engage in ESG investing. Republicans have filed that legislation in Idaho, Indiana and Minnesota.


One of SB 41’s co-sponsors is Senate Pro Tem Bart Hester (R-Cave Springs), who sponsored the anti-BDS (boycott, divestment, sanctions) law in 2017 that required all state contractors to sign a pledge promising not to boycott Israel. That’s the law the Arkansas Times has been challenging, unsuccessfully so far, in federal court.