• Governor Ron DeSantis and a coalition of 18 other states are expected to announce an alliance opposing President Biden’s ESG agenda, claiming it destabilizes the American economy and the global financial system.
• The multi-state alliance aims to leverage state pension funds to ensure corporations prioritize shareholder value over “woke ideology.”
• DeSantis previously announced legislation in Florida to protect citizens from ESG policies’ impact, barring financial institutions from discrimination and banning the use of “Social Credit Scores.”
• Critics argue that penalizing investment managers and banks adhering to ESG policies may reduce competition, leading to higher costs and lower returns on investment.
• But DeSantis and his allies say that’s exactly what ESG investors are doing when they eliminate investment options based on political factors.

On Thursday, Governor Ron DeSantis is expected to announce an alliance of 18 states to fight against what the coalition calls “President Joe Biden’s environmental, social, and corporate governance (ESG) agenda,” which the alliance argues is destabilizing the American economy and the global financial system.

A spokesman for the governor’s office confirmed the planned announcement in an email to The Capitolist late Wednesday.

According to the draft letter, a coalition of 19 states, comprised of Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Iowa, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Oklahoma, South Dakota, Tennessee, Utah*, West Virginia, and Wyoming, pledges to work together “as freedom loving states” to “leverage our state pension funds to force change in how major asset managers invest the money of hardworking Americans, ensuring corporations are focused on maximizing shareholder value, rather than the proliferation of woke ideology.”

In December, Florida announced it was pulling $2 billion of the state’s money out of BlackRock, Inc., which at the time was the largest anti-ESG withdrawal by any state. But the combined efforts of 18 other states could have an even broader impact.

The letter calls the proliferation of ESG policies “a direct threat to the American economy, individual economic freedom, and our way of life, putting investment decisions in the hands of the woke mob to bypass the ballot box and inject political ideology into investment decisions, corporate governance, and the everyday economy.”

The alliance of states says it is committed to state-level efforts that include removing all state pension funds and state-controlled investments from firms that follow the ESG model of “politics before fiduciary duty.”

Instead of investing money based on political fads or conventional wisdom as defined in mainstream media, DeSantis and other conservative leaders say that pension fund managers should focus solely on sound investment strategies to maximize returns for investors and retirees.

Last month, DeSantis announced legislation aimed at protecting Floridians from the impact of ESG (environmental, social, and governance) policies. This legislation would bar financial institutions from discriminating against customers based on their religious, political, or social beliefs, as well as ban the use of “Social Credit Scores” in banking and lending practices.

The proposed law also aims to prevent state agencies, local governments, and government agencies from investing public funds in ESG funds or depositing funds into banks that adhere to ESG policies and eliminates the consideration of ESG factors by state and local governments when issuing bonds. The legislation additionally prevents banks from denying services to clients simply because they operate in the fossil fuel or firearms industries.

But some economic analysts warn that penalizing investment managers and banks that base their decisions on what some states consider “socialist” or “woke” policies could have significant consequences, such as reducing competition by limiting investment options for fund managers and regular customers alike. Less competition could lead to higher costs and lower returns on investment.

In Florida, Democrats have also been critical of DeSantis’s proposal. A spokesman for Democrat state Senator Shevrin Jones, a vocal opponent of DeSantis’s “anti-woke agenda”, said Jones was studying the matter and expected to issue a statement shortly.

And Democrat State Representative Dotie Joseph told the Orlando Sentinel in January that she was concerned the ban on ESG might harm those who were counting on the Florida Retirement System by limiting investment options.

“A lot of these companies do, unlike the free state of Florida, care about this kind of stuff, and it does make a difference on the bottom line,” Joseph told reporters. “Short-term studies have shown those companies do [focus on ESG strategies] tend to perform better than those that don’t.”

But the DeSantis alliance discounts those studies while pointing out that ESG-oriented investments are actually limiting choices through their failure to consider non-“ESG compliant” alternatives.

“As Governors, we are committed to protecting the interests of our constituents and will keep fighting the [Biden] Administration’s decision to jeopardize retirement savings for millions of Americans to promote far left priorities,” the expected letter from the alliance concludes.

A copy of the expected letter, in draft form, can be viewed here.

*An earlier version of this story listed Vermont instead of Utah. It has since been corrected.