Republicans in New Hampshire want to make ESG investment of state funds a crime punishable by up to 20 years in jail

• GOP legislators in New Hampshire have proposed a bill to prohibit the use of ESG criteria for state investment funds. 
• Knowable violation would be a felony, with imprisonment between one and 20 years.
• ESG-led investing of state funds is "akin to fraud," sponsor Mike Belcher told Business Insider.

A proposed bill in New Hampshire would prohibit environmental, social, and governance standards from guiding investment decisions using state funds, with violators subject to potentially lengthy jail time. 

The HB 1267 bill would make it a felony to consider ESG criteria when investing funds from the state treasury, retirement system, or executive branch agencies. Knowable violations would be punishable with imprisonment of between one and 20 years.

Instead, investments should be based on maximizing financial returns and minimizing risks, the policy proposal outlined. 

"This bill is applying a fix to an existing executive order that, as currently exists, is unenforceable," State Representative Mike Belcher, one the bill's sponsors, told Business Insider. "This legislation seeks to treat ESG investing of state-managed funds, which we expect to be invested to maximize gains, as akin to fraud, as potential earnings are being stolen and leveraged for social and political activist purposes."

Alongside two other Republican lawmakers, Belcher introduced the bill to the state's House of Representatives in early January. 

Besides prohibiting ESG investments, executive agencies would have to review investments and implement steps to prove that no funds are invested with firms guided by ESG standards.

The proposal would require both the state treasurer and New Hampshire's retirement system to annually report to the governor and legislature to demonstrate compliance.

Through 2023, ESG investing standards and those that use them have come under fire from politicians, with some scrutinizing the criteria as an extension of left-leaning cultural and political agendas. Legislative pushback has been seen before the latest proposal in New Hampshire, with GOP lawmakers pushing similar bills on the federal level.

Attached to the HB 1267 proposal was a note from the Treasury Department, citing that full restriction in the use of ESG criteria could potentially come into conflict with laws and orders requiring the state treasurer to maximize financial benefits.

"The potential exclusion of certain financial institutions might raise costs or miss earnings opportunities, but the specifics are uncertain resulting in an indeterminable impact to state revenue and expenditures starting in FY 2025," it said.

Similarly, the New Hampshire Retirement System noted that the proposed curbs could reduce returns, though uncertainty remains as to how this could impact employer contribution rates.