State and local governments soon won’t be able to make investment decisions on the basis of environmental, social and governmental (ESG) considerations — or invest in companies that do — after the Senate approved HB 3, a top priority for Gov. Ron DeSantis.
The party line 28-12 vote on Wednesday came after a debate in which Democrats argued the move interferes with private companies’ decisions and limits the state’s options for investments, boosting interest costs.
“This legislation is an attack on free speech and an affront to the free market,” said Sen. Lori Berman, a Lantana Democrat.
But bill sponsor Sen. Erin Grall, a Vero Beach Republican, said that ratings agencies that use “social credit” scores and ESG considerations when rating bonds shouldn’t be used to affect Florida’s bond ratings, and potentially, the state’s policies. DeSantis has argued those considerations are an end-run around elected legislatures, where public policies should be decided.
“It’s our job to make sure that we set the policy for the state of Florida and that should never be in conflict with the way in which our money is invested,” Grall said.
The bill now heads to DeSantis’ desk, having passed through the House last month on an 80-31 party line vote.
The bill also bans investment managers from issuing ESG bonds or inking contracts with rating agencies that use ESG guidelines in issuing bond ratings and bans financial institutions from discriminating against consumers on the basis of religious or political beliefs or affiliations or on a “social credit score.”
“What this bill says we’re not going to discriminate,” Grall said. “We should not be prohibiting people from accessing those services.”
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.