Florida state pensions banned from ESG use

The State Board of Administration oversees $240bn

Florida Governor Ron DeSantis is the latest Republican politician to take aim at ESG investment strategies by eliminating such considerations for the state pension funds. 

DeSantis, along with other trustees of the State Board of Administration, passed a resolution on Tuesday that directs fund managers of Florida’s pensions to invest state funds in a way that prioritizes the highest return possible, without considering ESG criteria, according to a statement from the governor. 

“Corporate power has increasingly been utilized to impose an ideological agenda on the American people through the perversion of financial investment priorities under the euphemistic banners of environmental, social and corporate governance and diversity, inclusion and equity,” DeSantis said in the statement. 

“The tax dollars and proxy votes of the people of Florida will no longer be commandeered by Wall Street financial firms and used to implement policies through the board room that Floridians reject at the ballot box,” he said. 

DeSantis chairs the State Board of Administration, a constitutionally created investment-management organization governed by a three-person board of trustees. Along with DeSantis, Florida Chief Financial Officer Jimmy Patronis and Attorney General Ashley Moody oversee the organization. It manages more than 30 funds, including the Florida Retirement System Pension Plan and the Florida Hurricane Catastrophe Fund. 

The SBA had about $240bn under management as of May, with roughly 80% of that in the FRS Pension Plan, according to a performance report. About half the assets were invested in global equities, 17% in fixed income and about 11% in real estate, the report said.

‘Pecuniary Factors’

The resolution passed Tuesday specifies that investment decisions “must be based only on pecuniary factors” that don’t consider “social, political or ideological interests,” according to the release.

Republican state officials have become sharp critics of Wall Street’s ESG policies this year. A group of attorneys general from mainly GOP-run states penned a letter to BlackRock Inc. this month, saying the world’s largest asset manager is pursuing ESG investment policies to the detriment of their state pension funds. And Missouri recently launched an investigation into Morningstar Inc. and its subsidiary Sustainalytics Inc. over the firm’s evaluation of ESG issues.

Last month, DeSantis slammed ESG-focused asset managers and banks, saying he would work with state lawmakers to pass legislation to battle what he called “woke ideology” that punishes conservative Americans.