In the latest example of ESG’s sudden backlash, Florida Republican governor and possible presidential candidate Ron DeSantis announced Wednesday that he is “taking a stand against woke CEOs.”
DeSantis said he will work with the state’s legislature to ban ESG considerations when investing state funds, as well as prohibit financial institutions from “discriminating against customers for their religious, political or social beliefs.”
“Do we govern ourselves through our constitution and elections, or do we have these Masters of the Universe occupying these commanding heights of society?” he rhetorically asked at a morning news conference. “Are they able to use their economic power to impose policies on the country that they could not do so at the ballot box?”
Administrative action the governor plans to take includes statutory reforms to put “the people of Florida first, and we’re going to do what’s in their best interest, not whatever the delusions of some wealthy, woke CEO wants to do.”
State Board of Administration (SBA) fund managers, the entity that manages Florida’s pension funds, will be prohibited from using political factors when investing state money. SBA fund managers will only consider maximizing the return on investment for retirees.
“For every Master of the Universe who’s prattling on about no emissions and all this stuff, I don’t see many of them giving up their private jets,” DeSantis added. “They are living their own lives, and they want the burden of their policies to fall on working-class Americans.”
The remarks and planned action come at a time of increasing ESG scrutiny, with the strategy criticized for imprecise measurement and benchmarking, as well as serving as cover for underperforming company managers.
University of Chicago researchers analyzed Morningstar data, finding high flows but poor performance in those with supposedly solid sustainability ratings.
BlackRock, the world’s largest asset manager, recently tempered its ESG enthusiasm in the wake of higher inflation and gas prices. High-profile investors and entrepreneurs Peter Thiel, Elon Musk, and Charlie Munger criticized ESG. Former Vice President Mike Pence said states should “rein in” ESG inclusion efforts in public pension funds.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.