HB1253

House Bill 1253, known as the 'State Government Employee Retirement Protection Act,' mandates that fiduciaries of Arkansas state and local government pension benefit plans prioritize only pecuniary factors—those with a material impact on financial risk or return—when managing investments and voting on shareholder proxies. The bill explicitly prohibits fiduciaries from considering or promoting nonpecuniary goals, such as environmental, social, political, or ideological objectives (often referred to as ESG considerations), unless they directly translate to a material economic risk or opportunity. Fiduciaries are required to act solely in the interest of plan participants to provide retirement benefits and defray administrative expenses. The bill also places restrictions on following the recommendations of proxy advisory firms, requiring that they and other asset managers commit to pecuniary-only guidelines. Additionally, the bill mandates that all proxy votes be reported annually and posted publicly. The Arkansas Attorney General is granted enforcement authority to investigate potential violations of these provisions.