Stockholm (NordSIP) – As the world seeks to find a path that reconciles capitalism with an increasingly sustainable approach to finance and business management, conservatives across the pond continue to try to stop these efforts, despite asset managers’ warnings.
These efforts appear to have recently culminated with the signing of a sweeping anti-ESG law by Ron DeSantis, Florida’s Governor and Republican presidential hopeful. Following the signing into law of these new measures, ESG factors will not be allowed to be taken into account in any state or local decisions, including in the procurement and contracting process or bond issuances. “Third-party [ESG] verifiers” and rating agencies whose ESG consideration could negatively affect issuers are also blacklisted in the state of Florida. Moreover, the law demands that asset managers that integrate ESG factor and have received public funds from the State of Florida must include a “conspicuous” disclaimer in their communication stating that “The views and opinions expressed in this communication are those of the sender and do not reflect the views and opinions of the people of the State of Florida”, among other issues.
DeSantis has taken a populist stance on the issue of ESG, at least partially staking his claim to the White House on the “commitment to protect consumers’ investments and their ability to access financial services in the Free State of Florida. (…) By applying arbitrary ESG financial metrics that serve no one except the companies that created them, elites are circumventing the ballot box to implement a radical ideological agenda. Through this legislation, we will protect the investments of Floridians and the ability of Floridians to participate in the economy.”
“We want them to act as fiduciaries. We do not want them engaged on these ideological joyrides,” DeSantis said, according to Reuters. However, the issue of ESG, particularly as pertains to the environment, is not an abstract elite conspiracy, particularly in a state with Florida’s climate where it would be easy to argue that climate change is a material consideration if asset managers are to fulfil their fiduciary duty. “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,” Thomas Torgerson, co-head of global sovereign ratings at DBRS Morningstar, told Reuters.