Can government entities in Kansas "give preference" to electric mowers?

Kansas State Rep. Rui Xu (D-Johnson County) tweeted out on Monday, September 11, his opposition to House Bill 2100, stating:

Recently, I heard about a councilperson inquiring about electric mowers but was told HB2100 prevented the city from giving preference to electric mowers.

Gas mowers are loud and dirty! HB2100 is way overly burdensome for no good reason

— Rui Xu (@RuiXuKS) September 11, 2023

Rep. Xu ended up getting a lot of pushback for his tweets.

What councilperson? Who told them HB2100 prevented the city from giving preference to electric mowers? What was the preference being considered?

How does HB2100 cover "loud and dirty" as part of forbidden ESG considerations? (It doesn't)#ksleg

— Nathan (@Ho8Go8L1N) September 11, 2023

I, of course, respectfully disagree with my esteemed colleague and ranking Democrat. Under HB2100, cities can absolutely opt for electric mowers if they are cost-competitive with alternatives.#ksleg https://t.co/h4Iurf6YdK

— Rep. Nick Hoheisel (@RepHoheisel) September 11, 2023

So, what exactly is HB 2100?

Also known as the ‘Kansas Public Investments and Contracts Protection Act,’ this bill was introduced to the Kansas House on January 19, 2023, ultimately passing both the House (76-47) and Senate (27-12). Kansas Governor Laura Kelly (D) was, seemingly, apprehensive about this bill passing, stating, “Because I have reservations about the potential unforeseen consequences of House Bill 2100 for the state and for local governments, I will allow the bill to become law without my signature.”

This bill does a lot of things with its main focus being to tackle environmental, social, and governance (ESG) issues.

Under Section 1 (4), the bill defines ESG as:

“Environmental, social and governance criteria” means any criterion that gives preferential treatment or discriminates based on whether a company meets or fails to meet one or more of the following criteria:

(A) Engaging in the exploration, production, utilization, transportation, sale or manufacturing of:

(i) Fossil fuel-based energy;

(ii) nuclear energy; or

(iii) any other natural resource;

(B) engaging in the production of agriculture;

(C) engaging in the production of lumber;

(D) engaging in mining;

(E) emitting greenhouse gases or not disclosing or offsetting such greenhouse gas emissions;

(F) engaging in the manufacturing, distribution or sale of firearms, firearms accessories, ammunition or ammunition components;

(G) having a governing corporate board or other officers whose race, ethnicity, sex or sexual orientation meets or does not meet any criteria;

(H) facilitating or assisting or not facilitating or assisting employees in obtaining abortions or gender reassignment services; and

(I) doing business with any company described by subparagraphs (A) through (H).

What this bill does in regards to ESG is state that government entities are not allowed to discriminate against persons or businesses that do not meet all of the criteria for being considered “ESG.” This is highlighted under Section 2 of the bill, which states:

(a) The state, any agency of the state, any political subdivision of the state, or any instrumentality thereof, including the pooled money investment board established by K.S.A. 75-4221a, and amendments thereto, when engaged in procuring or letting contracts for any purpose, shall ensure that bidders, offerors, contractors or subcontractors are not given preferential treatment or discriminated against based on any environmental, social and governance criteria.

(b) The state, any agency of the state, any political subdivision of the state or any instrumentality thereof, including the pooled money investment board established by K.S.A. 75-4221a, and amendments thereto, shall not adopt any procurement regulation or policy that causes any bidder, offeror, contractor or subcontractor to be given preferential treatment or be subject to discrimination based on any environmental, social and governance criteria, except as otherwise specifically permitted or required by law.

It is important to note that under Section 2, businesses that do fall in line with ESG can, also, not be discriminated against for simply falling in line with the criteria to be considered “ESG.”

Under Section 3 of the bill, it highlights how the government is allowed to spend taxpayer dollars with the main objective being that it is financially beneficial for taxpayers, and not something that costs more for the sake of being in line with “ESG”. However, this does not mean that a government entity cannot use taxpayer dollars to pay for something that falls in line with “ESG,” like an electric lawnmower, if it is financially the best option for taxpayers.

(a) In making and supervising investments of the system, the system and any investment manager, proxy advisor or contractor thereof shall discharge its duties solely in the financial interest of the participants and beneficiaries for the exclusive purposes of:

(1) Providing financial benefits to participants and their beneficiaries; and

(2) defraying reasonable expenses of administering the system.

(b) An investment manager, proxy advisor or contractor retained by the system shall be subject to the same fiduciary duties as the system’s board of trustees.

(c) A fiduciary shall consider only financial factors when discharging such fiduciary’s duties with respect to the system.

(d) All shares held directly or indirectly by or on behalf of the system or the participants and their beneficiaries shall be voted solely in the financial interest of system participants and their beneficiaries.

(e) Unless no economically practicable alternative is available, the system shall not grant proxy voting authority to any person who is not a part of the system, unless such person has a practice of, and in writing commits to, following guidelines that match the system’s obligation to act solely upon financial factors, in which case the system may grant proxy voting authority to such person.

(f) Unless no economically practicable alternative is available, in the selection of any proxy advisor, the system shall give preference to a proxy advisor service that commits in writing to engage in voting shares and making recommendations in a strictly fiduciary manner, and without consideration of policy objectives that are not the express policy objectives of the system, in which case the system may engage a proxy voting advisor.

(g) Unless no economically practicable alternative is available, system assets shall not be entrusted to a fiduciary, unless such fiduciary has a practice of, and in writing commits to, following guidelines, when engaging with portfolio companies and voting shares or proxies, that follow the system’s obligation to act solely upon financial factors and not upon policy considerations that are not the express policy objectives of the system, in which case the system may entrust engagement and share voting to a fiduciary.

(h) Unless no economically practicable alternative is available, an investment manager or contractor shall not, in providing service for the system, follow the recommendations of a proxy advisor or other service provider, unless such advisor or service provider has a practice of, and in writing commits to, following proxy voting guidelines that follow the system’s obligation to act solely upon financial factors, in which case the investment manager or contractor may follow the recommendations of a proxy or other service advisor.

(i) All proxy votes shall be tabulated and reported annually to the system’s board of trustees and to the joint committee on pensions, investments and benefits. For each vote, the report shall contain a vote caption, the system’s vote, the recommendation of company management and, if applicable, the proxy advisor’s recommendation. Such reports shall be posted on the system’s website for review by the public.

(j) Subsections (e) through (i) shall apply only to assets managed on behalf of the system and shall not apply to alternative or real estate investments as defined in K.S.A. 74-4921(5), and amendments thereto.

The bill does go on to pursue other objectives with ESG that are not related to whether a government entity can purchase an electric lawnmower, but the ultimate goal is that the government does not unjustly discriminate against a person or business that offers a product or service that is not in line with “ESG,” and looks strictly at the financial side of the product or service. So, while a supposed “councilperson” may have been told they weren’t allowed to give preference to an electric mower for government purposes, they would have been misinformed, as this bill would not keep any government entity from giving preference to something like that so long as it was financially the best option, as, again, this bill keeps businesses that meet the criteria for “ESG” from being discriminated against by the government as well.