FL House OK’s sanctions on ‘woke’ investing but Senate seems slow to follow
The Republican majority in the Florida House approved Gov. Ron DeSantis’ attack on “woke” investing on Friday, passing a bill that forbids the state from doing business with financial institutions that invest based on environmental and other nonpecuniary criteria.
The vote was 80-31. The future of the bill (HB 3) is not clear, however, since its Senate companion (SB 302) has yet to receive a committee hearing.
“ESG is nothing more than a form of discrimination, a form of Marxism, being pushed by unelected officials, progressives that hate our country, and some of the largest investment firms in the world,” bill sponsor Bob Rommel, a Republican from Collier County, told the House.
He referred to the shorthand for “economic, social, and governance” criteria investors apply to gauge total risks to their investments in a world endangered by climate change, inequality, and corporate malfeasance.
Democrat Michele Rayner-Goolsby, representing parts of Hillsborough and Pinellas counties, wasn’t having it. “Woke,” she said, traces to the civil rights era, when Blacks warned each other to remain awake to the dangers of white backlash and violence.
“The fact that the majority party has coopted this word, “woke,” and used it and tagged it on to anything you don’t like, is offensive. Because when I hear “woke” — and I can’t speak for the other Black folk, I’m going to talk about this Black woman — when I hear “woke,” I hear the N-word lite. That is what I hear.” Rayner-Goolsby said.
DeSantis is firmly behind the anti-ESG push, having prompted the State Board of Administration, on which he sits with Attorney General Ashley Moody and Chief Financial Officer Jimmy Patronis, to stop investing state and local pension money in funds that espouse the practice. Patronis has already withdrawn $2 billion from BlackRock.
“The Chief Financial Officer, or other party authorized to invest on his or her behalf, must make decisions based solely on pecuniary factors and may not 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,” the bill says.
“The weight given to any pecuniary factor must appropriately reflect a prudent assessment of its impact on risk or returns.”
The bill forbids state or local governments from depositing funds with banks that discriminate against customers based on their “political opinions, speech or affiliations,” or their religious beliefs. Also targeted is use of any “social credit score” based on politics; religion, gun ownership or participation in the gun business; participation in the fossil fuel industry, timber, mining, or agriculture; or opposition to illegal immigration or drug or human trafficking.
Neither can these governments do business with banks that base lending on ESG standards including employee and board diversity and diversity and inclusion training.
State-regulated banks could face fines or license revocations if they violate these standards in lending and be subject to civil lawsuits. They’d file twice-yearly reports with the state attesting to their compliance. If the chief financial officer determines a bank lied, he could refer the case to the attorney general, who could sue in court for damages or seek administrative penalties.
The bill is part of a concerted push in Republican states to rally around the fossil-fuel industry — a point Rommel alluded to in crediting use of such energy sources to economic advancement and extension of human lifespans.
“People are living longer, all these great inventions have been created, and — I don’t know if it’s directly related to fossil fuels, but something happened back then,” he said.
Democrat Dotie Joseph, of Miami-Dade County, noted that corporate scandals including the 2010 BP oil spill and 2015 Volkswagen emissions scam highlight the need for sound corporate governance.
“All of these things rocked the companies’ stock prices and cost billions of dollars,” Joseph said.
“Part of the reason we have these criteria is because we know that these companies seem to have more responsible record keeping, they are less risky businesses,” she added.