Publisher's Note: This post appears here courtesy of the The Daily Wire. The author of this post is Ben Zeisloft.
Florida lawmakers approved a bill to prevent state and local government entities from offering debt or investing public funds in accordance with the environmental, social, and corporate governance movement, also known as ESG.
Members of the Florida Senate voted 28-12 in favor of the legislation on Wednesday after their counterparts in the Florida House voted 80-31 to pass the bill last month. The legislation now awaits the endorsement of Florida Republican Governor Ron DeSantis.
The legislation would prohibit government actors from issuing "ESG bonds,"
defined by the bill text as financial products such as green bonds and certified climate bonds meant to "finance a project with an ESG purpose."
The legislation also mandates that Florida public investment officials must enact decisions "based solely on pecuniary factors"
and are not permitted to "subordinate the interests of the people of this state to other objectives, including sacrificing investment return or undertaking additional investment risk to promote any nonpecuniary factor."
Florida public fund managers are also barred from entering into contracts with ratings agencies "whose ESG scores for such issuer will have a direct, negative impact"
on bond ratings. State officials are likewise forbidden from conducting business with financial institutions that cancel services to users for their political affiliations, as well as those which utilize a "social credit score"
system meant to tabulate a user's political opinions, firearm ownership, involvement with the fossil fuel industry, or opposition to illegal immigration.
Skeptics of the ESG movement assert that the investment philosophy intermixes political and social causes favored by executives, such as reducing carbon emissions or diversifying company leadership, in a manner that compromises or distracts from profitability. A number of firms have accordingly imposed apparent viewpoint restrictions on their users: PayPal announced last year that the firm would withdraw funds from accounts deemed to be promoting racism or misinformation, a policy that the company later claimed was published by mistake.
DeSantis has also advanced efforts to prevent the Florida Retirement System Pension Plan from investing in accordance with the ESG movement. "Corporations across America continue to inject an ideological agenda through our economy rather than through the ballot box,"
he commented earlier this year. "ESG considerations will not be tolerated here in Florida."
Concern toward the ESG movement from Republican officials has intensified over the past year amid the lackluster performance of funds devoted to the philosophy. Technology firms, which ESG managers tend to favor because of their emphasis on corporate social responsibility, suffered considerably in the stock market, while energy companies, which ESG managers tend to dislike because of carbon emissions associated with the sector, witnessed outsized returns.
The crackdown against social credit scores, a mechanism used in nations such as China to monitor individuals' social opinions and restrict economic freedom for those who hold purportedly unacceptable views, in the most recent Florida legislation follows efforts from DeSantis to combat the possible implementation of a central bank digital currency by the Federal Reserve and the White House. Critics of a potential central bank digital currency note that the asset, which would be managed by the Federal Reserve and tethered to the value of the dollar, would form opportunities for surveillance and control of private citizens.