Virginia’s attorney general has issued advice urging officials from the state’s retirement system to refrain from prioritizing environmental, social, and corporate governance issues in their investment decisions, as per a nonbinding legal analysis released recently. Jason Miyares, a Republican incumbent serving as Virginia’s top prosecutor, suggested in an advisory opinion that the board of trustees for the Virginia Retirement System should focus on investments that aim to secure the best financial outcomes for VRS beneficiaries. The retirement system caters to members like state employees, public school teachers, and workers from political subdivisions like counties, towns, and cities.
Miyares emphasized the importance of basing investment choices on thoughtful financial planning and not being swayed by what he referred to as unsubstantiated ESG trends, stating, “Secure futures require sound economics.” His advisory opinion came following a request from Republican Del. Nick Freitas, as some state pension programs have begun prioritizing environmental, social, and corporate governance policies, a strategy known as ESG investing.
Virginia Sowers, a spokesperson for the retirement system, clarified that their current approach does not prioritize such investments. To fulfill their fiduciary duty, VRS conducts in-depth analyses of economic factors and monetary risks to maximize long-term returns, without employing social screens or dedicated ESG funds in their retirement plans.
While states like Illinois and Maryland have mandates to consider sustainability and climate risks in asset-related decisions, Maine’s pension fund, for example, is mandated to divest from fossil fuels by 2026. Conversely, states like Florida, Indiana, and Kansas have enacted legislation against ESG investing.
In Virginia, there was a proposal in 2022 to require the retirement system to divest from fossil fuels, but the bill did not pass into law. Another bill in 2023 aimed at restricting investments based on environmental and political factors also did not succeed.
Miyares’ recent advisory opinion constitutes his 10th memo in 2024. While attorney general opinions provide legal guidance, they are not legally binding on courts.