It requires the Florida State Board of Administration, Tallahassee, to make investment decisions "solely on pecuniary factors." The board, which consists of Mr. DeSantis, Chief Financial Officer Jimmy Patronis, and Attorney General Ashley Moody as trustees, oversees a total of $232.5 billion in state assets, including the $181.7 billion Florida Retirement System. The bill also requires the FRS investment policy statement to comply with the requirement that only pecuniary factors be considered in investment decisions, which formalizes under a state statute an action for which the three trustees already voted. They passed a resolution in August that all decisions related to the investment management of the retirement system will not include ESG considerations.
The vote for the bill, which also punishes any banking or lending institutions for integrating ESG factors, came after multiple calls from Democrats on the Senate floor that it interferes with private enterprise. Democratic Sen. Tina Scott Polsky said in remarks on the floor that she considers the bill to be socialist. "Socialism is state control of production, distribution, and change of goods and services. I'll vote for capitalism and vote no on this bill," Ms. Polsky said.
Sen. Jason W.B. Pizzo called the bill "absolutely laughable," saying the bill shows "we are not a business-friendly state."
The bill, which also affects all public retirement systems in Florida, defines pecuniary factors as any factor that any system board and/or fiduciary "determines is expected to have a material effect on the risk or returns of an investment based on appropriate investment horizons consistent with the investment objectives and funding policy of the retirement system or plan. The term does not include the consideration of the furtherance of any social, political or ideological interests," according to the bill text.
The bill also requires all retirement systems to submit a comprehensive report detailing and reviewing their governance policies, including the exercise of shareholder rights, by Dec. 15 of this year and by Dec. 15 of every odd-numbered year thereafter. The SBA on behalf of the Florida Retirement System, will submit its report to the governor, CFO, attorney general, president of the Senate and speaker of the House of Representatives. Other systems are required to submit their reports to the state's department of management services, which will provide a summary by Jan. 15 of the following year and "report any incidents of noncompliance to the attorney general, who may institute proceedings to enjoin any person violating this section," according to the bill.
Mr. DeSantis in July revealed his plans to introduce the legislation. In a video posted on Mr. DeSantis' Twitter account July 27, he said, "We're going to work … to make sure that we have statutory reforms so that we're putting the people of Florida first. We're going to do what's in their best interest, not whatever the delusion of some wealthy woke CEO wants to do."
Mr. Patronis, one of two other trustees on the State Board of Administration, praised the bill in a March 14 news release, saying, "Too many asset managers and bankers have forced businesses throughout the nation to adopt ESG standards for whatever reason, and this legislation will provide Florida banks with a good reason to end whatever ESG-nonsense that's being shoved down their throats."