Republican Gov. Ron DeSantis has enacted an impactful rebuke of the environmental, social, and corporate governance (ESG) movement in Florida. Along with trustees of the State Board of Administration, he passed a resolution on August 23 directing Florida fund managers to invest state pension funds, not based on ideological agendas or preferences, but such that the the investment chases the highest return for the state's taxpayers and retirees.
The resolution stipulates that investment decisions "must be based only on pecuniary factors. ... Pecuniary factors do not include the consideration of the furtherance of social, political, or ideological interests." It stresses further that the SBA "may not sacrifice investment return or take on additional investment risk to promote any non-pecuniary factors" when making investments or proxy votes.
This resolution is the synthesis of two of three legislative proposals announced on July 27 by DeSantis. All three are intended as curbs on the ESG agenda, which "threatens the vitality of the American economy and Americans' economic freedom" and targets "disfavored individuals and industries to advance a woke ideological agenda."
The third proposal, if enacted, will prohibit big banks, credit card companies, and money transmitters from discriminating against customers for their religious, political, or social beliefs.
In his Tuesday release, DeSantis said, "Corporate power has increasingly been utilized to impose an ideological agenda on the American people through the perversion of financial investment priorities under the euphemistic banners of environmental, social, and corporate governance and diversity, inclusion, and equity." ESG considerations that previously guided investment decisions, claimed DeSantis, deprioritized taxpayers' and pensioners' financial security in service of "whimsical notions of a utopian tomorrow."
Stephen Soukup suggested in his 2021 book "The Dictatorship of Woke Capital" that ESG is favored by two types of investor. The "first of these is the investor who very much wants to make gobs and gobs of money but doesn't want to seem crass and greedy." The second type of investor "believes that changing the world will require eliding politics as usual and circumventing the will of the people, as expressed through political means."
DeSantis has apparently taken issue with the second of these two types of ESG investor in particular. He recently posed the question: "Who governs society? Do we govern ourselves through our Constitution and through our elections? Or do we have these masters of the universe occupying these commanding heights of society ... able to use their economic power to impose policies on the country that they could not do so at the ballot box?"
TechCrunch reported that the governor's most recent move may prove detrimental to businesses promoting diversity, inclusion, and equity, as well as "diverse founders."
Sasja Beslik, a proponent of the ESG movement and chief investment officer at NetGen ESG, called DeSantis' resolution "tragic." He suggested that "pension money ... runs the most significant financial risk if they don't take ESG into account."
This resolution concerning the SBA is not the first action the Florida governor has taken against forces he has slammed as being "woke." In April, he stripped Disney of its special privileges after the corporation tried to exert pressure to overturn Florida's Parental Rights in Education bill.
"In Florida," said DeSantis, "our policy's going to be based on the best interest of Florida citizens, not on the musings of woke corporations."
Florida is not alone in its confrontation with the ESG movement.
This week, Texas Republican Comptroller Glen Hegar identified 10 companies and 348 investment funds, reportedly hostile to energy companies, that will be prohibited from doing business with the state.
On Wednesday, Hegar issued a statement, saying: “The environmental, social and corporate governance (ESG) movement has produced an opaque and perverse system in which some financial companies no longer make decisions in the best interest of their shareholders or their clients, but instead use their financial clout to push a social and political agenda shrouded in secrecy."