Florida Governor Ron Desantis this week signed into law Senate Bill 302, legislation to prohibit and penalize consideration of environmental, social and governance factors in the state’s investment decisions.
The new law codifies and expands a ban adopted by Florida’s State Board of Administration in August 2022 that prohibits asset allocators from considering ESG factors in their investment decisions. The expansion applies to all funds of the state treasury, as well as all local government retirement plans, investments of local government surplus funds and investment of funds raised by citizen support or direct-support organizations.
“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,” DeSantis stated in a press release.
The law 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;
- All state and local entities from considering or giving preference to ESG as part of the procurement and contracting process;
- Banks that engage in corporate activism from holding public deposits as a qualified public depository;
- 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;” and
- The financial sector from considering social credit scores in banking and lending practices that aim to prevent Floridians from obtaining loans, lines of credit and bank accounts.
The bill also directs Florida’s attorney general, chief financial officer and commissioner of financial regulation to enforce the provisions.
“Just as the Governor fought [former director of the National Institute of Allergy and Infectious Diseases Anthony] Fauci—and won—he’s fighting a woke Wall Street that looks down upon every-day Americans,” Jimmy Patronis, Florida’s chief financial officer states.
In January, a group of 25 states sued to halt the Department of Labor’s rule permitting fiduciaries to use ESG factors when selecting investments for ERISA retirement plans. A group of 25 Republican attorneys general coalition of 19 states, including Florida’s, sued, along with a fossil-fuel company, a fossil-fuel advocacy group and a Manhattan Institute scholar. The case is pending in the U.S. District Court for the Northern District of Texas, Amarillo Division.
DeSantis said he hopes the Florida legislation will provide a blueprint for other states.