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Ron DeSantis of Florida Gov. said he would work with the state legislature to codify a rule prohibiting state pension funds from considering ESG factors in investment decisions. |
Ron DeSantis’s administration of Florida Gov. approved a proposal on August 23 to block the state’s $186 billion pension fund from considering environmental, social or governance factors when making investment decisions.
The proposal came amid red-state criticism of the Biden administration’s climate accountability rules, which require companies to track and report emissions.
The term ESG refers to taking into account the impact of businesses’ practices when making investment or corporate decisions. The SEC is monitoring the ESG targets of public companies to hold them accountable for their promises to reduce emissions.
DeSantis, who is reportedly considering a 2024 presidential run, told a state board of administration meeting that ESG policies are “dead on arrival in the state of Florida.”
Three Republican governing trustees of the State Board of Administration, of whom DeSantis is one, voted to approve the new rule., DeSantis said he will work with the state legislature to codify the new rule into law and expects other states to follow Florida’s lead.
Florida’s governor ordered the state’s pension fund to be invested with the goal of “maximizing financial returns, among other things.”
Florida ranks 15th in terms of pension fund returns
Adam Hattersley, a Democrat and former legislator running for Florida’s chief financial officer, which would make him a member of the board that oversees the state’s pension fund, said ESG has never discussed decisions made by the board. Ignored.
“They’re creating a problem to grow their base and it looks like they’re solving something,” Hettersley said in an interview. “If they should only consider fiduciary benefits when investing, why didn’t they run away from our Russian investments with the pension plan? When Russia invaded Ukraine, 25 states disinvested and the Democrats asked for it, But they refused and we lost about $300 million.”
According to the American Investment Council, Florida’s 2.6 million-member public retirement system was the nation’s ninth largest in 2021 for private equity investments, but lagged behind 14 other systems for returns.
The state’s defined benefit pension plan has lost $20 billion since the start of the year, said Lamar Taylor, the fund’s interim chief investment officer and executive director who introduced the rules at the meeting. The Boston College Center for Retirement Research reported this month that nearly 200 state and local pension funds in the country declined after stock market losses and inflationary pressures.
Most ESG-focused funds have been lagging the overall S&P 500 index since early 2021 in an S&P Global Market Intelligence survey of select funds — a trend analysts said reflects the fund’s heavy reliance on tech stocks, along with geopolitical events. Is.
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DeSantis’ proposal on ESG follows steps to influence corporate and school district policies on LGBTQ+ rights and other social issues. This summer, The Walt Disney Company lost its special tax district at its theme parks in Orlando after the company’s CEO spoke out against a Florida law that prohibited schools from discussing gender and sexual orientation with young students. went.
DeSantis’ campaign against progressive policies has spread throughout the economy. The governor was a champion for the new Stop Vocal Act, which, among other things, prevents businesses from mandating diversity training. Earlier this month a federal court partially blocked the law.
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