DeSantis signs sweeping anti-ESG legislation in Florida

Ron DeSantis/ Shutterstock

(Reuters) — Florida Gov. Ron DeSantis signed into law Tuesday a bill barring state officials from investing public money to promote environmental, social and governance goals, and prohibiting ESG bond sales.

The bill is one of the furthest-reaching efforts yet by U.S. Republicans against sustainable investing efforts, and a clear political message from DeSantis, a likely presidential candidate.

Republicans, including some from energy-producing states, say many executives and investors have lost their focus on returns as they take growing account of issues like climate change and workforce diversity.

“We want them to act as fiduciaries. We do not want them engaged on these ideological joyrides,” Mr. DeSantis said just before he signed the bill at a webcast event.

Lawyers and credit analysts said the new law could deny municipalities access to large pools of ESG-mandated capital. A further issue is how officials interpret the terms, said Thomas Torgerson, co-head of global sovereign ratings at DBRS Morningstar, which rates debt.

“If we as a rating agency cannot assess environmental, social or governance risk that creates a problem for us. There are climate and weather risks that are highly relevant, especially in a state like Florida, and would be captured in our assessment of credit risk,” he said.