HB 3: Florida Requires Investment Decisions Based Solely on Pecuniary Factors, Not ESG Interests
Summary
HB 3 was adopted in May 2023 and requires the Chief Financial Officer of the state to make state fund investment decisions based solely on pecuniary factors. For any retirement system or plan, plan administrators may only consider pecuniary factors when investing assets or deciding whether to exercise shareholder rights. Lastly, the law requires the State Board of Administration, the board that oversees investment of public funds, to consider only pecuniary factors when deciding whether to invest the assets of the fund. This last component of the law codifies a non-binding resolution passed in August 2022.
The law defines pecuniary factor to mean a factor that the Chief Financial Officer, plan administrator, or State Board of Administration, respectively, "determines is expected to have a material effect on the risk or returns of an investment based on appropriate investment horizons consistent with the investment objectives and funding policy." A pecuniary factor "does not include the consideration of the furtherance of any social, political, or ideological interests."
Additionally, the law prohibits state and federal financial institutions from discriminating against people in the provision of services based on a variety of factors, such as religious or political affiliation, firearm ownership or advocacy, or failure to commit to certain environmental, social governance, or corporate board standards.
