Bill
HB 5237
HB 5237 would require public retirement fiduciaries to consider only pecuniary factors in investments, prohibiting nonfinancial ESG objectives.
Status & procedural history
- Bill: HB 5237 (House Introduced Bill)
- Sponsor: Rep. Ann Bollin (and multiple co-sponsors)
- Introduced: March 14, 2025; House first readings April 7, 2025 and November 6, 2025
- Referred to: Judiciary & Civil Jurisprudence (April 7, 2025); later referred to Committee on Economic Competitiveness (Nov. 6, 2025)
- Electronic reproduction: 11/06/2025
- Companion bill: SB 2961
Purpose / intent
- The bill amends section 13 of the Public Employee Retirement System Investment Act (1965 PA 314, MCL 38.1133) to restrict public retirement-system investment decisions to pecuniary (financial) factors and to prohibit investment decisions motivated by nonpecuniary social, political, or ideological objectives — commonly associated with “ESG” (environmental, social, governance) investing.
Key substantive provisions
- Fiduciary duty: Reaffirms that an investment fiduciary must act solely in the pecuniary interest of participants and beneficiaries and meet customary prudence standards (care, skill, diligence).
- Restriction on factors considered: Language requires fiduciaries to “consider only pecuniary factors” (now expressly “subject to sections 14 and 20k”), and it defines:
- “Pecuniary factor” as a factor an investment fiduciary determines would have a material effect on an investment’s risk or return, using appropriate investment horizons consistent with the plan’s funding objective.
- “Material effect” explicitly excludes effects that further nonpecuniary, noneconomic, or nonfinancial social, political, or ideological objectives.
- Defined-contribution plans: Participant-directed investments in individual accounts remain exempt from the Act’s percentage-limitation rules, and participants who direct their own accounts are not treated as investment fiduciaries under this Act.
- Existing governance and transparency duties retained/clarified: fiduciaries must prepare written investment objectives/policies, monitor compliance with statutory investment limits, maintain ethics and training policies, and publish a detailed annual summary report (including performance, fees, expenditures, actuarial metrics, and travel/training disclosures).
Who would be affected
- State and local public retirement systems and their investment fiduciaries (including boards and, when applicable, the state treasurer).
- Investment managers, advisors, and service providers to those systems.
- Providers and funds that market ESG-labeled products to public pension plans.
- Participants in defined-contribution plans (participant-direction remains allowed).
Potential impacts and considerations
- Would restrict or prohibit public retirement systems from using ESG or other nonpecuniary criteria when making investment decisions, unless those criteria can be shown to be materially tied to financial risk/return.
- Could lead to divestment from certain ESG-targeted funds or changes in manager selection processes to ensure compliance with the stricter “pecuniary-only” standard.
- May increase compliance, reporting, and legal-review burdens as systems document financial rationale for decisions and screen for nonpecuniary influences.
- The text references sections 14 and 20k — these provisions may create exceptions or additional rules (not included in the excerpt) and should be reviewed for full effect.
For a full legal assessment, stakeholders should review the complete bill text (including sections 14 and 20k) and related statutory context in MCL 38.1101 et seq., and monitor companion SB 2961.
Compiled from official sources — confirm details with the bill’s official record.
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