TALLAHASSEE, May 2, 2023
Governor Ron DeSantis signed a controversial bill on Tuesday that will restrict government investment strategies influenced by “environmental, social, and governance” (ESG) standards. This new legislation, House Bill 3 (HB 3), has been a major focus for House Speaker Paul Renner, R-Palm Coast, and represents a significant move against what Republicans have labeled as “woke” investment practices.
Key Provisions of the Bill
The legislation builds on previous measures by DeSantis and the state Cabinet aimed at ensuring that investment decisions within the Florida Retirement System Defined Benefit Plan are made based solely on financial returns, without regard to ESG criteria. The bill will take effect on July 1 and prohibits fund managers from prioritizing ESG factors like climate change and social diversity when making investment decisions.
Implications and Criticisms
While the law does not prevent fund managers from investing in companies that use ESG standards, it does restrict them from basing their investment choices on these factors. Critics argue that this restriction could cost the state financially and limit the flexibility of investment decision-making.
Proponents of the bill, including Renner, assert that it combats what they view as an extreme left-wing agenda. During the signing event in Jacksonville, Renner stated that the law stands up against politically driven investment practices that Republicans believe unfairly target industries such as fossil fuels, arms manufacturing, and private prisons.
Additional Measures
The bill also includes provisions to prevent financial institutions from using “social credit scores” to offer services. This means that banks and other financial entities cannot deny or cancel services based on individuals’ political opinions, affiliations, or speech.
Background and Broader Context
This legislation is part of a broader national movement among Republicans to push back against ESG investment practices. These practices are seen by some as prioritizing ideological goals over financial returns. In a notable related action, Florida’s Chief Financial Officer Jimmy Patronis announced in December that the state would withdraw $2 billion from BlackRock, the world’s largest asset-management firm, due to its ESG policies.
By signing HB 3 into law, Governor DeSantis reaffirms Florida’s stance against what he and his supporters view as politically motivated investment strategies, emphasizing a return to traditional financial principles in managing public funds.