A Florida bill that would bar financial institutions from considering environmental, social and governance (ESG) factors in their investment decisions advanced to the floor of the state House of Representatives this week.
Among the supporters of House Bill 3, authored by Rep. Bob Rommel (R-Naples), is Florida Chief Financial Officer Jimmy Patronis, who sees the bill as needed to assure taxpayers that their funds are getting the best returns when they are invested.
“Too many asset managers and bankers have forced businesses throughout the nation to adopt ESG standards for whatever reason, and this legislation will provide Florida banks with a good reason to end whatever ESG-nonsense that’s being shoved down their throats,” Patronis said in a prepared statement.
HB 3 would require that state and local governments invest the funds they control, including money held in trusts and retirement funds, in a way that maximizes the return on investment, without consideration of “social, political or ideological interests,” according to the Legislature’s analysis of the bill.
The Florida Bankers Association, however, has concerns about the effect of the bill and financial burdens it will place on Florida banks.
"We are working with the parties to try to fix what we think are unintended consequences that may impact a) all banks or b) more especially community banks with extra compliance costs or with extra burdens,” Anthony DiMarco, the association’s executive vice president for government affairs, told the Florida Record.
The bill’s effective date, July 1, is too soon, and certain terms used in the bill, such as “unsafe and unsound banking,” are problematic, according to DiMarco.
“It's going to fall on community banks more because they don't have in-house personnel that can do compliance overnight,” he said.
Rep. Rommel called ESG “a plague” on the state’s businesses and investment policies.
“House Bill 3 will protect taxpayer dollars and ensure Florida’s economy isn’t infected with corporate activism,” he said.
Banks could be subject to administrative sanctions and cease-and-desist orders if they defy the measure.