Senate preps vote on bill to ban social, political considerations in state, local investments

After more than an hour of debate in the Senate, a bill that would prohibit state and local governments from using environmental, social and governmental (ESG) considerations in making investment decisions is set for a final vote.

The bill (SB 302/HB 3) would also ban investment managers from issuing ESG bonds or inking contracts with rating agencies that use ESG guidelines in issuing bond ratings.

Sen. Erin Grall, a Vero Beach Republican and the sponsor of the bill, fielded questions from Democrats, who asked how Florida’s current ban on investing with companies involved in Iran, Cuba, North Korea or that boycott Israel lines up with the bill.

“We’ve made a policy decision as the state of Florida about countries that we will do business with (and) countries that we won’t do business with already,” Grall said. “Those are exempt from the policies in this bill.”

But Sen. Tina Polsky, a Boca Raton Democrat, also asked whether the ban on state and local investments for environmental reasons would preclude governments from issuing bonds like the one that helped create Babcock Ranch, a solar-powered, environmentally friendly development in Southwest Florida formed through a public-private partnership.

“Clearly they looked at environmental factors, climate change factors when building it,” Polsky said. “So is it possible for another municipality to build another Babcock Ranch?”

Grall responded that as long as bond issuance decisions are made for a specific purpose and not a vague environmental agenda, that would not be covered by the bill.

“What the bill prohibits are green bonds,” Grall said. “What these bonds are doing is they are putting the agenda before the return. So we’re not saying you can’t build an environmentally friendly building.”

The bill also bans financial institutions from discriminating against consumers on the basis of religious or political beliefs or affiliations or on a “social credit score.”

Senators as scheduled to vote on the bill Wednesday. The House version of the bill passed through that chamber on an 80-31 vote last month. Now it’s expected to clear the Senate and head to the desk of Gov. Ron DeSantis, who pushed for the measure as part of his agenda against “woke” investments.

DeSantis and the Cabinet have already begun to pull back from ESG-aligned investments. Chief Financial Officer Jimmy Patronis removed $2 billion of investments in BlackRock, an investment management firm, over the issue.