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The
bill is one of the furthest-reaching efforts yet by U.S.
Republicans against sustainable investing efforts, and a clear
political message from DeSantis, a likely presidential
candidate.
Republicans, including some from energy-producing states, say
many executives and investors have lost their focus on returns
as they take growing account of issues like climate change and
workforce diversity.
"We want them to act as fiduciaries. We do not want them engaged
on these ideological joyrides," said DeSantis just before he
signed the bill at a webcast event.
Analysts said the legislation goes further than other state
anti-ESG bills, even as business groups worry the efforts pose
financial risks. Florida's law now creates some questions of how
it will operate in practice, analysts said.
For instance, fund managers working for agencies like the
state's big pension fund would have to include disclaimers in
some communications with portfolio companies to make clear they
do not reflect Floridians' views.
Fund managers that don't include enough disclaimers could face
regulatory action, said Joshua Lichtenstein of law firm Ropes &
Gray. But, he added, "It's an oddity to say you're only talking
on behalf of some of your clients."
The law also outlaws the sale of ESG bonds, a popular way to
fund renewable energy projects or lower debt costs for borrowers
if they meet gender diversity or greenhouse gas emissions
targets.
Lawyers and credit analysts said the new law could deny
municipalities access to large pools of ESG-mandated capital. A
further issue is how officials interpret the terms, said Thomas
Torgerson, co-head of global sovereign ratings at DBRS
Morningstar, which rates debt.
"If we as a rating agency cannot assess environmental, social or
governance risk that creates a problem for us. There are climate
and weather risks that are highly relevant, especially in a
state like Florida, and would be captured in our assessment of
credit risk," Torgerson said.
(Reporting by Isla Binnie and Ross Kerber, Editing by Rosalba
O'Brien)
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