On March 28, Sierra Club Florida sent a letter to Senate President Kathleen Passidomo expressing the organization’s opposition to House Bill 3 on Government and Corporate Activism and its companion bill SB302. Targeting environmental, social, and corporate governance (ESG), this legislation is Tallahassee’s latest attempt to undercut diversity and inclusion efforts in Florida, and together with 44 partners and businesses around the state, Sierra Club Florida urges legislators to take action against this bill.
While some politicians attempt to brand it as a new concept, ESG has been a longstanding business practice for over 20 years. From green energy initiatives, to employee recruitment, to organizational structuring, ESG accounts for the full scope of issues that factor into fiscal decision making, allowing companies to gain a clearer understanding of the investments that impact – and grow – their bottom line.
If passed, HB3 and SB302 would prohibit the state from making ESG considerations in its procurement and contracting processes, effectively directing Florida’s cities, counties, parks, and other government entities to make investment decisions solely on “pecuniary factors”, ignoring the long-term benefits ESG standards create for the state’s fiscal health. Among many other costly consequences, this flawed calculation would force Florida to boycott a large swath of the financial sector, exclude the state from the green bonds market, and jeopardize the retirement security of our teachers, law enforcement, firefighters, and other public servants. At a time when Floridians are already facing exorbitant insurance fees and insurers are fleeing the state in droves, HB3 and SB302 would also leave our communities vulnerable to natural disasters by restricting access to funds for crucial resiliency projects. Florida deserves more investment to combat the climate crisis, not less.
Bills similar to HB3 and SB302 in other states have failed due to high anticipated costs to taxpayers and reduced returns for retired public servants. In Indiana, the state’s analysis put the cost of a similar bill at $6.7 billion in lost returns. A recent study estimated that if Florida were to prevent local governments from raising money for resilience projects, the cost of debt could rise by as much $361 million.
Emily Gorman, Director of Sierra Club Florida said, “In an administration fueled almost entirely by buzzwords, it’s no surprise the governor and his supermajority would seize upon the phrase ‘environmental, social, and corporate governance’ as an opportunity for political gain. In reality, ESG is a proven business framework that creates returns for investments like Florida’s pension system, and this legislation is nothing more than a PR stunt that holds Florida’s environment, economy, and residents hostage to Ron DeSantis’ presidential ambitions. Sierra Club Florida and its partners condemn HB3 and SB302, and urge the Florida Legislature to vote against this dangerous bill.”
Luigi Guadarrama, Political Director of Sierra Club Florida said, “DeSantis likes to feel smart by throwing around ‘ESG,’ but let’s call these standards what they are: responsible. Forcing Florida’s retired teachers, law enforcement, firefighters, and other public servants to foot the bill for DeSantis’ radical crusade is unacceptable. We deserve the freedom to make our own investment decisions and demand state and local governments invest our tax dollars responsibly. It’s imperative that our legislators protect Florida’s future, and vote NO on HB3 and SB302.”
Re: HB3 (Rommel, Sirois) House Bill 3 on Government and Corporate Activism - OPPOSE
On behalf of the undersigned organizations and businesses, we write to express our opposition for House Bill 3 on Government and Corporate Activism and its companion SB302. HB3 and its companion will force Florida municipalities to boycott a large swath of the financial sector, limit risk management tools available to public pensions, and exclude Florida from the green bonds market, among many other costly restrictions to public finances. We are concerned that limiting the freedom of Florida to practice responsible investments will cost Florida taxpayers and pensioners greatly.
We are also concerned that preventing Florida from issuing green bonds will burden taxpayers and leave our communities unable to raise funds for crucial resiliency projects. This bill would do nothing more than leave our communities more vulnerable to natural disasters at a time when Floridians are already facing exorbitant insurance fees and insurers are fleeing the state. Florida deserves more investment to combat the climate crisis, not less.
HB3 prevents Florida cities, counties, parks, and pensions from making sound financial decisions in the face of myriad material risks, such as corporate mismanagement, labor disputes, and the impacts of the climate crisis, in order to force investments in special interest polluters behind these bills. HB3 is a blunt tool that prevents critical and complex risk analysis by overly restricting interpretations of pecuniary risks to influence the market for political purposes.
ESG risks are pecuniary risks and bills similar to HB3 in other states have failed due to high anticipated costs to the state and pensioners from reduced returns. In Kansas, state fiscal analysis revealed that legislation requiring state pensions to divest from companies engaged in so-called “boycotts” could reduce returns by as much as $3.6 billion in the next decade. In Indiana, the state’s fiscal analysis put the cost at $6.7 billion in lost returns. A study by Econsult Solutions estimated that if Florida were to impose Texas-style restrictions on the bond market, which exclude banks on boycott lists, the cost of debt could rise by as much $361 million for Florida municipalities. HB3 goes further than Texas in bond restrictions – if passed, the state and municipalities would be unable to issue green bonds, excluding the state from a $2.28 trillion market.
HB3 fails to provide meaningful guidance or regulations for advancing sound business practices in the state of Florida. Pensions and municipalities must balance immediate-term support for retirees and residents, while looking to long-term returns for their beneficiaries, and protect against systemic risks. Shrinking the market has immediate consequences for state and municipal budgets, while economy-wide threats like climate change and inequity have material impact that would be dangerous and negligent to ignore. In a time like this, is it prudent to create uncertainty for regional banks and instability for taxpayers, retired teachers, law enforcement, and firefighters?
For these reasons, the undersigned organizations strongly oppose HB3 and SB302 and urge you to stop against these dangerous bills. Florida should be free to bank and invest responsibly.
Staff Attorney, Center for Biological Diversity
Co-Chair, Climate Reality N. Broward and Palm Beach
Executive Director, Cultural Arts Coalition
Campaign Coordinator, Dream.org
Mary Gutierrez Director, Earth Action, Inc
Mary Gutierrez Director, Earth Ethics, Inc
Senior Attorney, Earthjustice
Executive Director, Florida Conservation Voters
Alphonso Demond Mayfield Jr. President, Florida Public Services Union
Co-Chair, Indivisible Safety Harbor and North Pinellas
Organizer, Lee OFA Indivisible
Director, North Central Florida Indivisible
Organizer, Indivisible Florida 13
Co-Chair, Indivisible Mandarin
Co-Chair, Indivisible Florida Network
President, LULAC Council 7259
Chapter Director, Sierra Club Florida
President, ReThink Energy Action Fund
St. Peter St. Paul Community Council
Lead, Indivisible Manatee
Legacy Club Holdings, LLC
Legacy Hospitality Holdings, Inc
Vacation Benefits, LLC
LVR Assets, LLC
LVC Timeshare Management, LLC
Salt Palm Development, Inc
Legacy Association Management Services, LLC
LVC Timeshare Developer, LLC
Florida For Good, LLC
SPD 2022, LLC
Climate First Bank
Climate First Bankcorp, Inc.
SPD 540, LLC
Aloha Bay Condominium Association, Inc
Resort World of Orlando Condominium Section II Association, Inc
Resort Works of Orlando, Inc
Harbor Club Owner Association, Inc.
The Oaks at Resort World Condominium Association, Inc.
The Spas at Resort World Condominium Association, Inc
Villas at Resort World Condominium Association, Inc.
The For Good Movement, Inc
Sen. Dennis Baxley
Sen. Ben Albritton
Sen. Lauren Book
Speaker Paul Renner
Rep. Micahel Grant
Rep. Chuck Clemmons
Rep. Fentrice Driskell