Gov. Ron DeSantis, appearing in Jacksonville, signed a law Tuesday that he says will remove environmental, social and governance considerations from investment decisions and protect consumers’ ability to access financial services.
The governor had made the bill a priority in the current legislative session. He signed it at the Jaxport Cruise Terminal with House Speaker Paul Renner, R-Palm Coast, and state Chief Financial Officer Jimmy Patronis.
House Bill 3 expands on action DeSantis and the state Cabinet took earlier to require that the Florida Retirement System Defined Benefit Plan prioritize the highest returns — without consideration of the standards known as “ESG” — when making investment decisions.
DeSantis said the latest bill will protect Floridians from the ESG movement and what he called its attempt to use economic power to impose an agenda on society. “That is not going to fly here,” he said.
“We are recognizing the dangers with this agenda. It’s not your agenda; it’s not the agenda of the average Floridian or average American,” DeSantis said. “This is an elite-imposed agenda. These are people that have access to a lot of financial might, a lot of business and corporate resources, and they are trying to marshal that in service of their particular political agenda, and that is wrong. And today in Florida, it will stop.”
Critics have contended that the proposal will cost the state money and hinder investment decision-making. But Republicans across the country have criticized ESG as an “agenda-driven” effort against investments in fossil fuels, arms manufacturers and prisons.
Sovereign Ammo co-owner Laura DiBenedetto appeared at Tuesday news conference, saying she has faced roadblocks from banks and others who espouse environmental, social and governance standards.
Despite the Second Amendment allowing gun and ammunition ownership, DiBenedetto said she had difficulty getting a lease for their Bunnell business, while a bank loan needed review by its ESG Department. She supports the bill DeSantis signed.
“Our marketing efforts have been hampered by these ESG policies, because Sovereign Ammo has been blatantly censored, and yes, it does affect our bottom line,” DiBenedetto said. “I have had my social media content censored so many times I can’t even keep track anymore and the reasons are pretty eye-rolling. … I am not allowed to talk about my business in any overt way. I can’t post links to my products. Again, it is in the Second Amendment; we can have ammo. I am not allowed to post a photo of my product. How is this fair?”
In introducing the bill at a news conference Feb. 13 in Naples, the governor called ESG a direct threat to the American economy and individual economic freedom, and an attempt by the corporate elite to discriminate against those who do not follow a particular ideological agenda.
It 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 affect the issuer’s bond ratings. No state or local entity can consider or give preference to ESG as part of the procurement and contracting process, while banks that engage in corporate activism are prohibited from holding public deposits as a Qualified Public Depository, the governor said.
He said the bill will prohibit financial institutions from discriminating against customers for their religious, political or social beliefs. That includes support for securing the border or owning a firearm. The bill also 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, the governor said.
But the bill does not prevent anyone from investing in a company that espouses ESG.
“At the end of the day, they are trying to exercise power over our society. They are trying to change society; they are trying to change policy when it comes to things that they don’t like,” DeSantis said. “There may be an ESG- approved company. If that’s a good value, you can do it. But what you don’t do is you don’t circumscribe so they can’t invest in other things like energy.”
Other parts of the bill prohibit banks that engage in corporate activism from holding government funds as a Qualified Public Depository, or using ESG in all investment decisions at the state and local level. It also will block all state and local entities from considering, giving preference to or requesting information about ESG as part of the procurement and contracting process, the governor said.
“That will make a big difference, I think, in keeping this ESG stuff out of basic credit determinations, particularly when you are talking about rating these bonds, whether it is state or municipal bonds,” DeSantis said.
The law, which takes effect July 1, does not halt fund managers from investing in companies that use ESG standards, Renner said. But fund managers won’t be able to base investment decisions on issues such as climate change and social diversity thanks to this law.
Renner said the law stands up “against the far left and what they are trying to do through ESG and so many other things.”