Florida's Latest Anti-ESG Efforts

Today, Governor DeSantis (R-FL) signed into law an anti-ESG bill that, among other things, bars managers of the state's pension fund from considering ESG factors when making investments.  Instead, pecuniary factors are the only ones that can be considered.  Additionally, this legislation--according to a press release from Governor DeSantis' office--would (1) "[b]lock the use of ESG in all investment decisions at the state and local level"; (2) "[e]liminate consideration of ESG factors by state and local governments when issuing bonds"; (3) "[p]rohibit state and local governments from using ESG as part of the procurement process"; (4) "[b]an the financial sector from considering so called 'Social Credit Scores' in banking and lending practices"; and (5) "[s]top[] financial institutions from discriminating against customers for their religious, political, or social beliefs."  In effect, this legislation represents the latest--and most far-reaching--iteration of Republican efforts in Florida to combat ESG principles.   

Indeed, this legislation embodies an escalation in terms of the increasing divide between red and blue states in how they address ESG principles.  Notably, the Florida legislation enshrines into law protections against discrimination by banks for those individuals who "lawful[ly] own[] [] a firearm," are engaged in the "exploration, production, utilization, transportation, sale, or manufacture of fossil fuel-based energy, timber, mining or agriculture" or who "support . . . combatting illegal immigration," thus providing additional protection for certain categories of people who typically express conservative opinions and identify with causes supported by the political right wing.  That said, it is unclear the extent to which this legislation will have an impact for practical purposes (or survive legal challenge), or if it rather constitutes a form of "virtue-signaling" by Gov. DeSantis and the Florida Republican Party to their constituents. 

Nonetheless, it is clear that this Florida legislation will serve as a model for similar efforts by politically-aligned states, and contribute to the difficulties encountered by American businesses as they seek to navigate between the competing demands of blue states and red states with respect to ESG principles. (https://www.mintz.com/insights-center/viewpoints/2301/2023-02-15-navigating-fiduciary-duties-amidst-rise-anti-esg)