Florida Governor Ron DeSantis is taking aim at ESG investing as part of his ongoing war on things he considers “woke.” While the Florida executive is popular with his base, his work to discredit ESG investing could prove detrimental to the startup investing landscape, especially for diverse founders and fund managers.
In late July, DeSantis released a statement announcing a proposal to ban State Board of Administration (SBA) fund managers — the people who manage Florida’s $200 billion reserve from the Florida Retirement System — from taking environmental, social, and governance (ESG) factors into account when investing.
“When underrepresented fund managers struggle to access capital, fewer underrepresented founders receive funding.” Christie Pitts, general partner at Backstage Capital
A spokesperson for the governor’s office confirmed to TechCrunch the topic was on the agenda for discussion at yesterday’s Florida cabinet meeting, paving the way for the proposed restrictions to become a reality. This move could have a damaging impact on the amount of capital allocated to founders advocating for diversity, equity, and inclusion, as well as diverse venture fund managers — and therefore diverse founders. This is because it moves the focus away from the importance of investing in these entrepreneurs, possibly diminishing any extra attention ESG efforts provided in what is already a fraught landscape.
Calls for ESG investing have increased as the climate crisis worsens and women and minorities continue raising minuscule amounts of venture capital funding. TechCrunch even pondered whether reproductive rights should be considered under the ESG fold. Many industry experts agreed that it should. Yet, as diversity, equity, and climate change remain weaponized right-wing issues, some Republicans now see ESG as a threat.