No ESGs, ETJs: Bills nix green investments, planning tool

The North Carolina Legislative Building. Photo: Mark Hibbs

A bill that targets standards known as environmental, social and governance criteria, or ESG, has cleared the North Carolina General Assembly and was on its way to the governor Wednesday.

Republican Rep. Celeste Cairns, who represents Carteret and Craven counties, is a primary sponsor of House Bill 750, which prohibits state hiring and investment policies or criteria that consider environmental or socioeconomic factors. It passed the Senate Tuesday 29-18 with all present Democrats opposed.

It passed the House May 3 76-41 mostly along party lines but with no Republican opposition.

The measure also prohibits economically targeted investments, or ETIs. Both ESG and ETI are terms that the legislation defines as “using a set of standards to screen potential investments based upon the perceived impact to the environment and the social relationships between a company’s employees and the community.”

The terms also describe how a company’s leadership is structured in support of those standards, according to the bill language.

The bill allows environmental or social considerations only when “they present economic risks or opportunities that qualified investment professionals would treat as material economic considerations under generally accepted investment theories.”

The measure would forbid any state agency, political subdivision of the state, trust, committee, or commission of any political subdivision of the state from using, enforcing or providing data for use in, or otherwise participate in the creation or use of ESG or ETI policies related to hiring, firing or evaluating employees.

Except as allowed by law, ESG, ETI or related criteria shall not be considered in the awarding of state contracts.

The bill also includes a caveat that If any section or provision of the act “is declared unconstitutional or invalid by the courts, it does not affect the validity of this act as a whole or any part other than the part declared to be unconstitutional or invalid.”

Extraterritorial jurisdictions

Another measure that advanced Tuesday would eliminate a widely used local planning tool.

Sen. Mike Lee, R-New Hanover, is the primary sponsor of a measure that would eliminate extraterritorial jurisdictions, or ETJs, a zoning or planning designation extending 1-3 miles beyond corporate limits that municipalities typically use to control development and prepare for future growth.

Senate Bill 675 passed a first reading in the House Tuesday and was referred to the House Rules Committee. It passed a third reading in the Senate Thursday with all but one Democrat, Sen. Paul Lowe Jr. of Forsyth County, opposed.

Lee said that the bill would apply only to cities in counties with between 25,001 and 50,000 residents effective Oct. 1, 2025, and cities in counties with 25,000 and fewer people effective Oct. 1, 2024. He said the reason for having ETJs was eliminated when the legislature restricted involuntary annexations.

A previous version of the measure had included language prohibiting local governments from setting a minimum lot size larger than 8,700 square feet or prohibiting residential density of fewer than five units per acre. Sen. Bobby Hanig, R-Currituck, said last week that both provisions had been removed, the Elizabeth City Daily Advance reported.