On Monday, May 21, 2024, Congressman Nadler (D-NY) and Congressman Correa (D-CA), the ranking Democratic members on the House Judiciary Committee and relevant subcommittee, sent a letter to the Attorney General and Chief Financial Officer of Florida, demanding "information detailing the effects of" "recently enacted policies barring the investment of state funds with firms that consider certain material risk factors, such as climate change." The letter noted that "[a] growing body of evidence demonstrates that these policies threaten public employees' retirement savings and leave taxpayers on the hook for higher fees and increased borrowing costs." The letter demanded answers to six specific questions--e.g., the direct and indirect effects on Florida's finances--by June 3, 2024. (Some of the questions also appeared to focus on issues that would be especially politically salient, such as the "lost economic activity, lost jobs, lost tax revenue, and lost benefits of competition" stemming from such policies, as well as comparing the "performance of your state's pension funds" to "equivalent funds in states without such laws.")
In effect, this letter represents a response to the Republican majority's use of the House Judiciary Committee to "investigat[e] the use of ESG investment factors by financial institutions, including some of the same firms targeted by state-level restrictions." While Congressional Republicans have initiated investigations into companies that engage in ESG investments (with the implicit--and sometimes express--intent of discouraging such ESG investments), House Democrats have now announced that, in response, they will investigate Republican-led states that have "substitute[d] politics for the reasoned judgment of investment professionals" through "[s]tate efforts to penalize responsible investment by limiting investors' use of environmental, social, and governance ("ESG") factors [which] have injected politics into previously objective financial decisions."
In short, this letter represents an escalation in the ongoing dispute concerning the proper use of ESG factors when making investments, and a further politicization of ESG between the Republican (anti) and Democratic (pro) parties. These developments in Congress, and any consequent impacts in state politics and corporate America, should be monitored closely.
We write to inquire about the impact on Florida taxpayers of your policies against responsible investment. Florida is among several states that have recently enacted policies barring the investment of state funds with firms that consider certain material risk factors, such as climate change. To inform congressional oversight efforts, we ask that you provide information detailing the effects of these investment restrictions.
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