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Governor Signs Anti-ESG Legislation Declaring "ESG is DOA in Florida"

The Florida Channel

Florida - Tuesday May 3, 2023: Governor DeSantis Tuesday signed into law a measure barring state investments in any company that promotes, or any financial instrument that has been subject to, environmental, social and governance principals known as ESG. "ESG is DOA in Florida," said the Governor after signing House Bill 3.

ESG refers to the application of Environmental, Social, and Governance standards used to screen investment, or other financial decisions, in order to encourage ethical and responsible corporate conduct. Many mutual funds, brokerage firms now offer investment products that employ ESG principles.

The Governor however has been critical of ESG calling it "a worldwide effort to inject woke political ideology across the financial sector, placing politics above the fiduciary duty to make the best financial decisions for beneficiaries."

"Through this legislation, Florida will continue to lead the nation against big banks and corporate activists who've colluded to inject woke ideology into the global marketplace, regardless of the financial interests of beneficiaries," said Governor DeSantis. "In Florida and across the nation, we've heard from law-abiding small business owners and consumers who've been denied access to financial services because of where they work or what they believe in."

House Bill 3 :

• Codifies actions taken by the State Board of Administration at Governor DeSantis’ direction to ensure that all investment decisions are driven solely by pecuniary factors and may not sacrifice investment returns to promote factors like ESG and extending these requirements to all state and local funds

• Prohibits the use of ESG factors by state and local governments when issuing bonds, including a contract prohibition on rating agencies whose ESG ratings negatively impact the issuer’s bond ratings

• Prohibits all state and local entities from considering or giving preference to ESG as part of the procurement and contracting process

• Prohibits banks that engage in ESG corporate activism from holding public deposits as a Qualified Public Depository (QPD)

• Prohibits financial institutions from discriminating against customers for their religious, political, or social beliefs — including their support for securing the border, owning a firearm, and increasing our energy independence

• Prohibits the financial sector from considering so-called “Social Credit Scores” in banking and lending practices that aim to prevent Floridians from obtaining loans, lines of credit, and bank accounts

• Directs the Attorney General, Chief Financial Officer, and Commissioner of Financial Regulation to enforce these provisions to the fullest extent of the law.

The new law codifies previous steps taken by the Governor and the State Board of Administration (SBA) to remove any ESG considerations from state investment decisions and ensuring that all investment decisions focus solely on maximizing the highest rate of return.

The full text of the resolution stipulating that state investment managers may not sacrifice investment return or take on additional investment risk to promote any non-pecuniary factors can be found here.