Under a new resolution passed by the Trustees of the State Board of Administration, Florida’s state pensions will be required to make investment decisions based solely on pecuniary factors.
More specifically, the resolution specifies that investment decisions “must be based only on pecuniary factors [which] do not include the consideration of the furtherance of social, political, or ideological interests” and stipulates that the SBA “may not sacrifice investment return or take on additional investment risk to promote any non-pecuniary factors” when making investments or proxy votes.
According to a press release from Governor Ron DeSantis (who is one of the Trustees), the resolution also instructs the SBA to “conduct a comprehensive review and prepare a report of the governance policies over the voting practices of the Florida Retirement System Defined Benefit Pension Plan.”
While the state pension funds don’t fall under the jurisdiction of ERISA or the Labor Department, the resolution specifically mentions the recent actions with regard to ESG by the Labor Department, noting that “WHEREAS, the definition of ESG has changed through the years and DOL’s approach to ESG investing practices has differed; and WHEREAS, the DOL made clear in recent years that fiduciaries responsible for investing retirement money should only consider financial factors in evaluating funds for investment potential; and WHEREAS, the Biden Administration has made clear its intention to encourage investment using ESG factors….”
Proxy Position
The resolution also states that “when deciding whether to exercise shareholder rights and when exercising such rights, including the voting of proxies, the board:
(a) Must act prudently and solely in the interests of participants and beneficiaries and for the exclusive purpose of providing benefits to participants and beneficiaries and defraying the reasonable expenses of the Florida Retirement System Defined Benefit Pension Plan.
(b) May not subordinate the interests of the participants and beneficiaries to other objectives and may not sacrifice investment return or take on additional investment risk to promote non-pecuniary factors.
(c) In the case of a conflict with this section and any other provision of Florida law, Florida law shall prevail.”
“Corporate power has increasingly been utilized to impose an ideological agenda on the American people through the perversion of financial investment priorities under the euphemistic banners of environmental, social, and corporate governance and diversity, inclusion, and equity,” said Governor Ron DeSantis.
“With the resolution we passed today, the tax dollars and proxy votes of the people of Florida will no longer be commandeered by Wall Street financial firms and used to implement policies through the board room that Floridians reject at the ballot box. We are reasserting the authority of republican governance over corporate dominance and we are prioritizing the financial security of the people of Florida over whimsical notions of a utopian tomorrow.”
