Florida Gov.
Ron DeSantis
is proposing legislation to prohibit state and local governments from including any environmental, social, or governance considerations in investment decisions.
The comprehensive anti-ESG legislation was previewed on Monday at an event in Naples, Florida, featuring DeSantis. The plan builds off
previous actions
that the governor has taken and would prohibit the use of
ESG
in all investment decisions at the state and local level, ban state and local entities from any consideration of ESG in the contracting process, and block state and local governments from weighing ESG when issuing municipal bonds.
Standing at a podium with “government of laws not woke politics” emblazoned on it, DeSantis discussed the legislation and characterized ESG investing as “a mechanism to inject political ideology into investment decisions, corporate governance, and really just the everyday economy.”
“By applying arbitrary ESG financial metrics that serve no one except the companies that created them, elites are circumventing the ballot box to implement a radical ideological agenda,” DeSantis said. “Through this legislation, we will protect the investments of Floridians and the ability of Floridians to participate in the economy.”
REPUBLICANS AIM TO TURN ESG INTO 2024 LIABILITY FOR DEMOCRATS
While proponents of ESG goals see it as a way that finance and business can cause social change (for example, mitigating climate change), Republicans see the drive as an attempt to distort the free market and even the culture of the United States through capital and influence.
Last month, DeSantis announced that Florida is prohibiting state-run fund managers from considering environmental, social, and governance factors when making investments. And last year, Florida’s CFO Jimmy Patronis announced that the state would divest some $2 billion from BlackRock, the largest such state divestment from the money manager over its ESG stance.
DeSantis and Republicans in other states have railed against ESG investing and have emphasized that the only factor firms should be weighing when making investment decisions is maximizing financial returns.
The latest legislative push has garnered support from state Senate President Kathleen Passidomo and state House Speaker Paul Renner, both of whom attended the Monday event announcing the move.
“We will not allow these martini millionaires to push unsafe and unsound investment practices that silence debate in the political process, weaken investment strategies for Florida retirees, and discriminate against any individual’s beliefs,” said Renner.
West Virginia led the GOP charge against ESG last year when it deemed five financial institutions ineligible for state banking contracts on the grounds that they boycott fossil fuel companies.
Also this month, Oklahoma Treasurer Todd Russ announced he was planning to put financial institutions that “boycott” energy companies on a blacklist that will bar those firms access to billions of dollars from government entities.
Republicans are also going after ESG in court. Last month, 25 state attorneys general filed a lawsuit against the Biden administration seeking to stop a rule that allows retirement plan managers to weigh ESG when making investments.
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The barrage of anti-ESG action is a sign that the topic, once obscure, is quickly becoming a hot political issue and will likely be heading into the 2024 elections. It is particularly of note that DeSantis is becoming more involved in the effort, given that he is seen as a top contender to be the GOP’s next presidential nominee.
“It’s going to be part of this national conversation, I think. If you’re at the national level, they are talking about this issue,” West Virginia Treasurer Riley Moore told the Washington Examiner following the midterm elections last year.
