As torrential rains caused flooding in Fort Lauderdale, forcing its airport to close, a Senate committee voted Thursday to forbid state and local agencies from considering the danger of climate change when investing pension money.
The bill (SB 302) cleared the Fiscal Policy Committee on a 13-6 party-line vote. Its next stop is the Senate floor. Similar legislation has already passed the House.
The measure targets “ESG” investing, or considering environmental, social, and governance factors when making investments. Gov. Ron DeSantis and Chief Financial Officer Jimmy Patronis are pushing to outlaw what they consider “woke” capitalism that subordinates returns for political or ideological factors.
Palm Beach County Democratic committee member Lori Berman remarked upon the dissonance between what the panel was doing and what was happening in Broward County.
“If you don’t think we should be looking at these issues, look at Fort Lauderdale today,” Berman said.
“The flooding that is going on right now shows the dramatic economic impact that climate change can have and how it can hurt all our businesses throughout the state,” she said. “The quote [from Desantis] was, ‘This is where woke goes to die.’ Well, I think this is where we are going not to get the best returns for our citizens.”
DeSantis declared a state of emergency in Broward, citing the 25 inches of rain that has fallen there, mobilizing state resources to respond.
‘Pecuniary factors’
The bill elevates “pecuniary factors” above any other investment criterion, defined as what an investment manager “prudently determines is expected to have a material effect on the risk or returns of an investment based on appropriate investment horizons consistent with applicable investment objectives and funding policy. The term does not include the consideration of the furtherance of any social, political, or ideological interests.”
“The chief financial officer, or other party authorized to invest on his or her behalf, must make decisions based solely on pecuniary factors and may not subordinate the interests of the people of this state to other objectives, including sacrificing investment return or undertaking additional investment risk to promote any nonpecuniary factor,” the bill says.
“The weight given to any pecuniary factor must appropriately reflect a prudent assessment of its impact on risk or returns.”
The context for the legislation is a concerted effort in Republican states to rally around the fossil-fuel and gun industries, which some fund managers disfavor because of their environmental and social consequences.
Both the House and Senate bills would forbid state or local government entities from depositing money with banks that discriminate against customers based on their “political opinions, speech, or affiliations,” or their religious beliefs.
They also target use of any “social credit score” based on politics; religion, gun ownership or participation in the gun business; participation in the fossil fuel industry, timber, mining, or agriculture; or opposition to illegal immigration or drug or human trafficking. Also disfavored would be banks that base lending on loan applicants’ employee or board diversity and inclusion training.
Rich Templin, lobbyist for the AFL-CIO, dismissed the suggestion that pension fund administrators are subordinating returns to politics. In fact, he said, it’s this legislation that is introducing political considerations.
Pension managers look “30, 50 years out,” Templin said. “If you can’t consider social, political, environmental, you can’t make a decision.”
This article originally appeared in florida phoenix