DeSantis pushing legislation to expand his crusade against ‘woke’ capitalism

By: - February 13, 2023 3:39 pm

Gov. Ron DeSantis attended a news conference on Feb. 13, 2023, in Naples. Source: Screenshot/DeSantis Facebook

Gov. Ron DeSantis and legislative leaders are promising to extend the governor’s campaign against “ESG” investing through legislation barring state and local agencies from putting taxpayer money in banks that consider more than the naked bottom line in managing investments.

“ESG stands for “environmental, social, and governance” considerations in investments on behalf of stockholders or pension beneficiaries. That means factoring in the danger of climate change or the benefits of diverse workplaces with corporate controls to prevent nepotism, embezzlement, and other ills.

But to DeSantis and his Republican allies, ESG is a way for financial elites to enact policies they never could win through the political sphere.

“Sometimes people will try to say you do better with this, but that doesn’t make any sense. Because if you don’t have ESG, you can invest in green stuff if it’s profitable; there’s no restriction on that. You invest in what is best. ESG restricts the ability to do that,” DeSantis said Monday during a news conference in Naples.

“And you think about what they’re doing if they advance a political agenda, if it’s a corporate executive, they’re using shareholder assets to do that. They’re using people’s pension money and 401K money to advance a political agenda, and that is not an appropriate use of corporate power,” he said.

No legislation appears to have been filed yet for the regular legislative session that opens on March 7, but the leaders said state Rep. Bob Rommel of Southwest Florida will carry the measure.

‘Corporate activism’

Individual pension beneficiaries might never notice a difference, except to the extent these policies help grow or depress earnings. ESC proponents argue it makes sense to consider how well the banking and investment system serve broader social goals; diverse workforces, for example, tend to be more creative and develop stronger companies.

Among other things, according to a handout from the governor’s office, the legislation would bar banks “that engage in corporate activism” from holding state and local money among their deposits; similarly, state and local governments couldn’t deploy ESG when investing money or even asking about it when signing contracts.

The measure would protect bank customers against discrimination bases on religious, political, or social beliefs, “including their support for securing the border, owning a firearm, and increasing our energy independence.”

And it would bar consideration of “social credit scores” by banks — meaning consideration of nontraditional factors including potential borrowers’ social media accounts and social networks when assessing their credit worthiness, a trend that has been developing for several years.

State House Rep. Paul Renner. Credit: House

To DeSantis, this reeks of the Chinese Communist Party’s (CCP) use of social criteria in evaluating whether people qualify for jobs or housing loans.

“This is actually something you’re more likely to find in the CCP; it doesn’t have a place in the US of A. But what they’re doing is they’re ranking you about what you’re doing to basically conform your behavior to their ideological imperatives. And that’s not something that’s acceptable here in the state of Florida,” he said.

Endorsing the push were House Speaker Paul Renner and Senate President Kathleen Passidomo, also Republicans.

“It’s being hatched out of the U.N. and out of Davos on their values, not ours,” Renner said of the investment policy, aimed in “one narrow ideological direction.” He referred to  the annual gathering of the financial elite in Davos, Switzerland.

High costs

Meanwhile, The Hill reports a Sunrise Project study’s conclusion that banning ESG could hit states pursuing these policies with as much as $708 million in combined added investment costs, including increases for Florida ranging from $97 million to $361 million. Those numbers represent extrapolations from a Wharton School of Business analysis of the anti-ESG law in Texas.

On Jan. 17, the State Board of Administration — comprising Republicans Attorney General Ashley Moody, and Chief Financial Officer Jimmy Patronis — voted to strip more than $200 billion in state and local government pension investments from managers that consider ESG criteria.

In August, 19 Republican state attorneys general wrote a letter to BlackRock, the world’s largest asset manager at $10 trillion, alleging it made decisions based on its political agenda rather than the welfare of state pensions.

Florida’s Moody was not a signatory, but Patronis, who manages state government’s books among other duties, has already begun moving $2 billion in state investments away from BlackRock.

Patronis issued a written statement later in the day.

“When it comes to ESG, many of us have been boiled like a frog,” he said.

“The governor is right that over time ESG has wound its way into too many aspects of American society, and pulling it back is going to take work. This proposed legislation puts returns first, it puts the Constitution first, and it puts corporate America on notice that if they play politics with Florida residents, we’ll have the tools to hold them accountable. I look forward to working with the DeSantis administration, as well as Senate President Passidomo and House Speaker Renner in getting this legislation over the finish line.”

Correction: An earlier version of this story misreported the meaning of ESG. It stands for “environmental, social, and governance” investing.

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.

Michael Moline
Michael Moline

Michael Moline has covered politics and the legal system for more than 30 years. He is a former managing editor of the San Francisco Daily Journal and former assistant managing editor of The National Law Journal.