DeSantis Creates an Alliance of 19 States Opposing Biden’s ESG Agenda

What happened: Earlier this month, Congress passed a resolution to block retirement plan managers from making investment decisions based on environmental, social, and corporate governance (ESG) factors. Yesterday, President Joe Biden vetoed the bill. In response to Biden’s promise to veto the bill earlier this month, Florida Gov. Ron DeSantis launched an initiative with 18 other states to fight back against the president’s ESG agenda.

The state alliance: The initiative ensures that only financial factors are considered in state and local investment decisions. It calls for legislative action to prevent ESG influence on government investments and to ban financial institutions’ use of “Social Credit Scores.” In a joint statement, the 19 states expressed their intention to “[ensure] corporations are focused on maximizing shareholder value, rather than the proliferation of woke ideology.”

In a nutshell: Supporters claim ESG “sustainable” and ethical investment requirements are important because climate change and social issues should be factored in and prioritized when making investment decisions. Critics argue ESG politicizes investing, prioritizes woke ideology over returns, and puts retirement funds at risk. The progressive investing system incentivizes companies to donate to social causes like Black Lives Matter, adopt diversity and inclusion training and diversity quotas, and support LGBT ideology, all to improve their ESG scores. Plus, research shows ESG funds perform worse than traditional funds.

Implications: While the alliance is symbolic, it mirrors Florida’s anti-ESG House Bill 3, which is expected to pass and would ban the state and local governments from investing based on ESG guidelines. The states in the alliance will likely introduce similar legislation, placing DeSantis at the movement’s forefront.