The Implications Of DeSantis’ 19 State Anti-ESG Alliance

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by Forbes

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The Implications Of DeSantis’ 19 State Anti-ESG Alliance

I am an attorney who writes about ESG policy, laws, and regulations.

Florida Governor Ron DeSantis was joined by 18 Governors, all Republicans, in an announced alliance against environmental, social, and governance (ESG). The announcement specifically calls for the utilization of their respective state pension funds to undermine ESG efforts in the United States.

The statement emphasized the following: "We as freedom loving states can work together and leverage our state pension funds to force change in how major asset managers invest the money of hardworking Americans, ensuring corporations are focused on maximizing shareholder value, rather than the proliferation of woke ideology."

Divesting state pension funds from ESG linked investments has become a first step for states wanting to take action against ESG. State pension funds are typically managed by a small board who make decisions based on their fiduciary duty, as defined under state statutes. In Florida, the Trustees of the State Board of Administration (SBA) are the Governor, Chief Financial Officer, and Attorney General. All elected members of the Florida Cabinet. When Florida initially divested in August 2022, the Trustees simply passed a resolution giving the directive. No legislation was needed.

The alliance goes further, calling for legislative action which will limit investments at the state and local level, limit the ability of state agencies and municipalities to issue green bonds, and limit financial institutions' ability the use "social credit scores." These policy points mirror HB 3, the anti-ESG legislation currently in the Florida Legislature.

The significance of this alliance is not in the announcement itself. The document on its face has no legal authority. Like most proclamations from a governor, the impact is mostly symbolic. However, the symbolism should not be missed. This alliance intentionally brings Florida's legislation to the forefront of the ESG debate. What Florida passes, 18 other governors will soon try to get their state legislatures to pass as well.

And Florida will pass anti-ESG legislation. Senate President Kathleen Passidomo (R-Naples) and Speaker of the House Paul Renner (R-Palm Coast) not only support the legislation, but also held a joint press conference with Governor DeSantis to announce the introduction of the bill. Renner continues to make the legislation his priority, frequently speaking out against ESG. Florida's Chief Financial Officer Jimmy Patronis has thrown his full support behind the legislation and become a vocal opponent of ESG.

Florida's 60-day legislative session began March 7 and HB 3 is quickly working through the committee process with minimal changes. Once the legislation passes, it will become the model. Fund managers, business owners, and banking institutions in the other 18 alliance states should take note of the ESG policies in Florida, they are coming your way soon.

Note: The press release from Governor DeSantis' office was titled "Governor Ron DeSantis Leads Alliance of 18 States to Fight Against Biden's ESG Financial Fraud", leaving many to conclude only 18 states were involved. However, that number leaves out Florida, bringing the total to 19 states.

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