Florida passes anti-ESG bill
April 5, 2023
Florida has become the latest Republican state to prohibit the inclusion of ESG considerations in investment decisions, following similar legislation that passed in Kansas.
Governor Ron DeSantis signed an anti-ESG bill to require the Florida State Board of Administration to make investment decisions based “solely on pecuniary factors.”
Following the signing of House Bill 3 (2023), state officials that invest public money to promote ESG goals could be punished with regulatory action.
The legislation obligates state-registered banks to make loans to several anti-ESG industries, such as fossil fuels or manufacturing and selling firearms.
The bill also outlaws the issuance of green bonds by the government. The funding of environmental projects is permitted, but they cannot be labelled as green bonds.
After passing the House of Representatives with an 80-31 vote on March 24, the bill was passed by the Florida Senate on April 19 by a 28-12 vote.
Prior to the signing of the bill, DeSantis said: “We want them to act as fiduciaries. We do not want them engaged on these ideological joyrides.”
Florida has previously demonstrated clear disapproval for considering ESG factors in investments, as the state divested $2bn from Blackrock in 2022 for focusing on ESG.
Florida’s anti-ESG legislation follows a similar bill that recently passed in Kansas.
The bill restricts the $24.3bn Kansas Public Employees Retirement System from entering contracts with money managers that consider ESG factors.
In particular, the system will be prohibited from restricting investments in fossil fuel-based energy, nuclear energy, and mining.
The bill, which passed the House of Representatives 76-47 and the Senate 27-12 on April 6, will become law after Democratic Governor Laura Kelly decline to veto it.
However, the legislation has faced criticism after an analysis by KPERS found that the bill could lower state pension system returns by $3.6bn over the next decade.
Last Updated: 4 May 2023