The Florida House of Representatives passed House Bill 3 (HB 3) on March 24, prohibiting the consideration of environmental, social, and corporate governance (ESG) factors in public fund investments. 

The legislation requires fiduciaries to invest with the sole goal of maximizing returns based on financial factors. The state House voted 80-31 in favor of the bill, which now moves to the state Senate.

The Kansas House of Representatives passed a similar measure, House Bill 2436 (HB 2436), on March 23. It requires fiduciaries of the public employees’ retirement system to act solely in the financial interest of participants and beneficiaries. HB 2436 passed 85-38 and also proceeds to the state Senate.

Florida is one of 22 state governments with a Republican trifecta, meaning Republicans control both legislative chambers and the governorship.

Kansas is one of 11 divided state governments. While Republicans control both legislative chambers, Democrats control the governorship.

The votes on HB 3 and HB 2436 are recent examples of state legislative activity opposing ESG investment strategies, which consider non-financial factors in the management of funds and contracts, such as climate change, social justice, and diversity alignment.

The legislative strategy used with these two bills is called the sole fiduciary approach, where legislators mandate that fiduciaries of public funds use only financial factors when carrying out their duties. This is one of seven approaches legislators have used to oppose ESG investing.

At the other end of the spectrum is the non-financial criteria consideration approach, where legislators require public fund managers to consider ESG data and other non-financial criteria in their investment strategies. This is one of four approaches legislators have used to support ESG investing.