Florida Governor Ron DeSantis has signed a bill prohibiting the use of environmental, social, and governance (ESG) factors by state and local governments in their decision-making process for investments and business contracts.
The legislation also mandates state-registered banks to grant loans to industries that some have been avoiding, such as fossil fuels, private prisons, and firearms manufacturers.
The new law also bans the issuance of green bonds, which are government bonds issued to fund environmental projects. While the funding of environmental projects through bonds is still allowed, they cannot be labeled as green bonds under the new legislation.
The law aims to shift the focus of investments back to financial returns, using the pecuniary factors test established under a Trump Administration Department of Labor ERISA rule.
Governor DeSantis hopes that these new measures will prevent the imposition of social, political, or ideological interests on corporations.
Although the new legislation does not explicitly prevent ESG from being considered, it requires any such consideration to be based on financial interests. The law adds the pecuniary factors as standard to state statutes and prevents future administrations from rolling back the changes.
