On July 27, Florida Gov. Ron DeSantis lobbed a broadside attack on the latest woke investment scheme that has become all the rage among Wall Street elites and C-Suite executives: environmental, social, and governance investing.
Specifically, DeSantis announced that he will seek to enact “legislative proposals and administrative actions to protect Floridians from the environmental, social, and corporate governance (ESG) movement which threatens the vitality of the American economy and Americans’ economic freedom by targeting disfavored individuals and industries to advance a woke ideological agenda.”
According to DeSantis, “The leveraging of corporate power to impose an ideological agenda on society represents an alarming trend.”
He added, “From Wall Street banks to massive asset managers and big tech companies, we have seen the corporate elite use their economic power to impose policies on the country that they could not achieve at the ballot box. Through the actions I announced today, we are protecting Floridians from woke capital and asserting the authority of our constitutional system over ideological corporate power.”
In a nut-shell, ESG investing vastly increases the power and economic influence wielded by giant investment firms and multinational corporations by allowing them to determine who and which companies will have access to capital based solely upon their adherence to ESG scores.
Moreover, because ESG investing is entirely subjective in nature, and the metrics are apt to change at any moment, it allows large investment firms like BlackRock to nudge society in any direction our “betters” choose at a given point in time.
As of right now, ESG scores heavily favor companies that toe the “climate change/global warming is an existential crisis” line. They also currently reward companies that are all-in when it comes to implementing “Diversity, Equity, and Inclusion” initiatives. However, ESG metrics are not set in stone, and can be deployed to accomplish any woke cause with a few tweaks.
Yet, this pales in comparison to the greatest concern regarding the ESG movement: ESG investing allows powerful elites like BlackRock’s Larry Fink to favor their preferred social objectives with everyday Americans’ investment funds above their fiduciary responsibility to maximize shareholder profit.
Such is why DeSantis outlined three goals for his anti-ESG proposals.
First, the Florida governor willcall for legislation that would, “prohibit big banks, credit card companies and money transmitters from discriminating against customers for their religious, political, or social beliefs.”
Second, he will push for a bill that would, “prohibit State Board of Administration (SBA) fund managers from considering ESG factors when investing the state’s money.”
Third, he will seek to convince Sunshine State lawmakers to pass legislation that would “require SBA fund managers to only consider maximizing the return on investment on behalf of Florida’s retirees.”
According to DeSantis, “The proposed legislation will amend Florida’s Deceptive and Unfair Trade Practices statute to prohibit discriminatory practices by large financial institutions based on ESG social credit score metrics. This ‘ESG score’ is a framework created to force companies to meet ESG standards and arbitrarily includes metrics based on political affiliation, religious beliefs, certain industry engagement, and ESG benchmarks. Violations will be considered deceptive, and unfair trade practices will be punished according to the law.”
Furthermore, he “will propose an update to the fiduciary duties of the State Board of Administration investment fund managers and investment advisors to clearly define the factors fiduciaries are to consider in investment decisions. Environmental, social, or corporate governance factors will not be included in the state of Florida’s investment management practices.”
If DeSantis and the state legislature are able to accomplish these three goals in the 2023 legislative session, it would certainly be a big blow to the ESG movement.
Make no mistake, ESG investing is a scam with the purpose of increasing the wealth and power of multinational corporations, huge investment firms, big banks, and global elites. But, it could also trigger a grassroots tidal wave of opposition to the crass cronyism that is inherent to the ESG scheme.
At this point, it is too early to tell which direction ESG investing will take, but the fact that states like Florida (and Kentucky) are pushing back is a very good sign for those who favor free-market capitalism, also known as shareholder capitalism, over the corrupt arrangement that is “stakeholder capitalism” and ESG investing.
Chris Talgo (ctalgo@heartland.org) is senior editor at The Heartland Institute.