The public pension funds of Republican states including Texas, Florida and Missouri are backers of some of the world’s biggest impact fund managers. It is a sign that despite the ESG backlash from these states’ political leadership, their treasuries and investment teams are nevertheless subscribers to sustainability-focused investment propositions.

The investors behind funds in the Impact 50, New Private Market’s list of the biggest managers of impact funds by capital raised over the last five years, include several public pension funds for US states and cities. Using NPM’s database, we have identified 36 known LP commitments from US pensions and permanent funds to the Impact 50’s funds. This list will not be exhaustive, given many LP commitments are not publicly known.

Nearly half of these commitments have come from institutions under the administrations of Republican state governors, NPM found. Texas’s Teachers, Employees and Municipal Retirement Systems have made six commitments between them; Florida Retirement System Trust Fund has made four impact fund commitments; Alaska’s Permanent Fund, Ohio’s School Employees Retirement System and Missouri’s Local Government Employees’ Retirement System have each made two.

Many of these “red” states’ governors and legislatures have been at the forefront of the ESG backlash in the US. Anti-ESG bills, lobbies and political discourse vary from state to state, but they generally seek to prevent or prohibit non-financial considerations when investing public money.

Ohio, for example, passed a bill earlier this year banning its retirement systems’ boards from making “an investment decision with the primary purpose of influencing any social or environmental policy or attempting to influence the governance of any corporation.” Florida also passed a similar bill this year.

Funds in the Impact 50 seek to generate intentional, positive social and environmental outcomes alongside financial returns. The fact that red states form a significant part of many of their LP bases may simply be because the effects of anti-ESG laws and rhetoric have yet to be felt in illiquid private markets.

More likely, however, is that pension fund administrators and investors are not changing course because they consider their impact fund investments to be consistent with the anti-ESG laws from their states’ legislatures and governors. Most managers in the Impact 50 have stated they will not accept concessionary returns or additional risk in pursuit of non-financial objectives; instead they treat sustainability themes as a driver of returns.

Florida’s State Board of Administration – which has made four commitments to funds in the Impact 50 – saw no cause to discontinue or liquidate its impact investments after DeSantis’s bill was signed into law. “All SBA investment decisions are made singularly and solely for the purpose of maximizing financial return, managing risk, defraying reasonable costs and diversifying plan assets,” a spokesperson for the SBA told NPM earlier this year.