Watch out, wake up investors – Ron DeSantis is coming to get you, even if it means screwing up his voters.
On Tuesday, DeSantis signed into law a bill banning Florida state and local governments from investing public money in environmental, social and governance funds and entities — or ESGs. House Bill 3 It is a sweeping law that has many implications for both in-state money as well as the larger culture wars of the Republican Party.
The origins of such laws begin in Texas, when the state passed a law in 2021 banning it from doing business with banks and other entities that “boycott” the fossil fuel industry. Since then, the anti-ESG movement has gained momentum in state houses across the country, such as At least seven states In addition to Florida, it has enacted laws or adopted measures to target ESG investment. GOP lawmakers in Congress have also tried to take the fight nationally, by targeting the policies of the Biden administration Designed to encourage ESG. Culturally, anti-ESG sentiments have spread like wildfire on the right, even with that odd man painting Dilbert weighs in against “awakened” capitalism. No wonder DeSantis, who is looking to run for president, has thrown his weight behind the bill. (One of his competitors He designed his entire campaign around being against ESG.)
Florida’s bill is like a super-mutated, super-charged version of the bills passed elsewhere. Under the new law, it’s not just investment funds managed directly by the state of Florida that won’t be able to do business with banks deemed “woke.” Entities from the state parks system to schools and universities that receive any government money at all must renew their investment portfolios.
“Most of the attacks on ESG investment that have passed so far have been, in some cases, quite broad,” Jordan Heidler, an independent climate fiscal policy advisor, told Earther. “(Florida bill) This goes further, making it clear that any entity that receives money from the state government will be affected.”
The restrictions don’t stop there. The new law also prohibits the sale of ESG bonds, which are commonly used to finance clean, climate-friendly or resilience energy projects, and prohibits banks from lending money to individuals based on a range of factors, including “participation in exploration, production, use, transfer, sale or Fossil fuel-based energy manufacturing, timber, mining or agriculture.”
Incredibly, the bill’s sponsors don’t seem to know how all of these new restrictions will actually play out on the ground — and how they will affect everyday Floridians.
“I’m sorry I forgot my magic eight ball,” Republican Representative Bob Rommel told a fellow Democrat when asked. During a hearing in mid-March On how lawmakers will ensure Florida taxpayers don’t lose money if the bill passes. In a follow-up question about the green bond provisions of the bill, Rommel said it would allow the state to use a bond for projects such as building a dam to protect parts of the Everglades.
He continued, “But if you’re saying, ‘We’re selling fantasy dust to protect people from an unknown figure in the world,’ they’ll be left out.”
Unfortunately, the bill doesn’t establish criteria for making this distinction—and many bonds used in climate change mitigation projects, such as protecting buildings in the Everglades, We are ESG bonds.
“It is unclear what the effect of this ruling will be, but based on (Rommel’s) description, it would nullify some of the socially responsible links that would underpin some of the projects Rommel describes,” Heidtler said. “You could say the Florida Attorney General is now empowered to decide which environmental projects they care about, which they don’t, which green bonds they want approved and which they want audited. It doesn’t make me feel good.”
Many other countries have seen or considered anti-ESG laws Lots of repercussions from their decisions. Lawmakers in Indiana and North Dakota earlier this year backtracked on proposed anti-ESG bills over concerns it would harm small businesses; A board of directors that oversees the Kentucky Pension Fund told the state in February that it would not comply with the order to divest from BlackRock. one study Released in January It found that nationwide lobbying against ESG could cost taxpayers more than $700 million in higher payments. In January, the advisory firm Haedtler issued a note that estimated the cost of Florida’s bill could be more than $300 million to taxpayers.
Ultimately, the Florida bill demonstrates that Republican lawmakers are more interested in using ESG as a baton against the idea of ”wokeness” than in passing laws and policies that would benefit their constituents.
The broader principle and tool this gives them of pre-empting the big blue cities or of constraining debt issuance in communities they don’t like, which don’t vote for them, seems to be more important to them than the fact that sometimes in the least high-profile ways these bills Can counterproductive and harmful to the voters who vote for them,” Heidler said.