What sort of investment firms should the state of Kansas work with when investing for its retirement fund, KPERS? That question is the center of a new bill that has been heard over the last two days in the Kansas senate.

SB 291 is described as a law that “generally prohibits the use of environmental, Social, and governance criteria by the state and its political subdivisions for purposes of contracting and investing.”

The law focuses on ESG, or environmental social and governance investing. It’s a form of investing that prioritizes businesses and firms supporting social causes and environmentally conscious policies. 

The state’s attorney general and treasurer are two of the big supporters of the bill.

“We focus our state investments and contracts to meet the best interest of Kansans and not have any other considerations that might achieve a policy initiative and route to that particular goal," Treasurer Steven Jonson told the committee Tuesday.

The bill received pushback on Wednesday. The head of KPERS says it could potentially cost the state billions if they are forced to divest from any firm that even mentions ESG quickly.

Alan Conroy, KPERS executive director, told the Federal and state committee on Wednesday “we think that mix in over 10 years, we think the estimates about $3.6 billion loss, but it's just an estimate could be higher, could be lower.”

Conroy says if KPERS does lose that money from removing investments too quickly, the brunt of the costs would be felt by those who are already in the system. “Earning less on investments, that means the employers, state and local units of government would have to contribute, contribute more.”

At the end of the hearing, committee chair Sen. Mike Thompson asked Conroy if he would be willing to sit down with the bill writer to work out changes to avoid that huge loss and handle that divestment gradually. Conroy said he would be available anytime.

You can follow the bill here.