Last month, Gov. Ron DeSantis announced he would propose legislative measures aimed at curtailing the use of ESG factors in Florida. In the financial context, ESG is the use of environmental, social and governance factors in making investment decisions. The Florida proposal triggers acute economic and legal questions demanding a watchful and wary eye by financial institutions and their counsel.

In a Feb. 13 press release, DeSantis’ office describes the sweeping scope of the legislative proposal. The target is the use of ESG factors in decision-making by not only government actors but also financial institutions. According to the release, the aim will be to prohibit financial institutions from relying on ESG factors in banking and lending practices and to prohibit those that do so from holding government funds. The aim will also be to prohibit government fund managers from considering ESG factors in investment decisions and to prohibit any government entity from considering ESG factors as part of contract procurement or when issuing bonds. Senate Bill 302 and House Bill 3 track these themes.