Florida Gov. Ron DeSantis announced administrative actions and legislative proposals that are aimed at “protecting residents from the environmental, social, and corporate governance movement.”
Saying ESG threatens the vitality of the American economy and economic freedom by targeting disfavored individuals and industries to advance what it calls a woke ideological agenda, DeSantis is proposing legislation for the 2023 legislative session.
The proposal will prohibit fund managers at the State Board of Administration from considering ESG factors when investing the state’s money and require them to only consider maximizing returns on investment on behalf of Florida’s retirees.
The proposal would also prohibit big banks, credit card companies and money transmitters from discriminating against customers on the basis of their religious, political or social beliefs.
“The leveraging of corporate power to impose an ideological agenda on society represents an alarming trend,” DeSantis said in a statement released during a press conference in Tampa on Wednesday. “From Wall Street banks to massive asset managers and big tech companies, we have seen the corporate elite use their economic power to impose policies on the country that they could not achieve at the ballot box.”
The legislation would also amend the state’s Deceptive and Unfair Trade Practices statute to prohibit discriminatory practices by large financial institutions based on ESG social credit score metrics.
“This ‘ESG score’ is a framework created to force companies to meet ESG standards and arbitrarily includes metrics based on political affiliation, religious beliefs, certain industry engagement, and ESG benchmarks,” the DeSantis administration said in a release. “Violations will be considered deceptive and unfair trade practices will be punished according to the law.”
At the next meeting of the SBA, DeSantis said he will propose an update to the fiduciary duties of investment fund managers and investment advisors to clearly define the factors fiduciaries are to consider in investment decisions. ESG factors will not be included in the state of Florida’s investment management practices, under the proposal.
“Woke elites use ESG investing to prop up far left policies, undermining our national security and raising prices for Americans,” said House Speaker Designate Paul Renner. “The Florida House will join the fight to stop woke financial titans who seek to dictate policy to Floridians regardless of our choices at the ballot box.”
In fiscal 2021-22, Florida’s revenues surged, bringing the state’s total budget surplus to a record high of $21.8 billion, more than 21% above previous forecasts, as its economy continued to recover in the wake of the COVID-19 pandemic.
DeSantis said he will work with likeminded states to leverage the investment power of state pension funds through shareholder advocacy to ensure corporations are focused on maximizing shareholder value, rather than the proliferation of what he calls woke ideology.
“Through the actions I announced today, we are protecting Floridians from woke capital and asserting the authority of our constitutional system over ideological corporate power,” DeSantis said.
In a related ESG issue, DeSantis and Disney are still dueling over the Parental Rights in Education Act , which bans public school instruction for children through grade 3 about sexual orientation or gender identity. Opponents of the law call it “Don’t Say Gay” and claim the policy will hurt LGBTQ+ children. Supporters counter that it lets parents decide how their young children are taught about LGBTQ+ topics.
Walt Disney Company came out against the legislation, saying it would fight to have it repealed and the GOP-dominated state legislature approved a law to dissolve special tax districts starting next year that were created before 1968, notably the Reedy Creek Improvement District, which Disney effectively finances and runs to serve its Orlando-area resorts. In total, Reedy Creek has about $1 billion of debt outstanding.
The outcome of the situation remains fluid.