Florida Governor Ron DeSantis and Trustees of the State Board of Administration have passed a resolution that states fund managers for the State of Florida must prioritize the highest rate of return, without any ESG considerations. The resolution updates the fiduciary duties of fun managers for the State Retirement System to drop any ESG considerations in future investment decisions.

In a statement released on August 23rd, DeSantis said, "With the resolution we passed today, the tax dollars and proxy votes of the people of Florida will no longer be commandeered by Wall Street financial firms and used to implement policies through the board room that Floridians reject at the ballot box. We are reasserting the authority of republican governance over corporate dominance and we are prioritizing the financial security of the people of Florida over whimsical notions of a utopian tomorrow.”

So, essentially, DeSantis wants to stwer the state's Retirement System away from perceived high-risk ESG investments. That's perfectly reasonable. But here's the irony: The State Board Administration of Florida Retirement System's sixth largest holding is Tesla, a company whose mission statement is "to accelerate the world's transition to sustainable energy."

As you can see from their latest 13F filing, there are 950,700 shares of Tesla in the Florida State Retirement System portfolio. Well, three times as many now after this week's 3:1 split (and assuming they haven't sold any since the holdings were reported as of June 30, 2022). Tesla is indeed an outlier and extreme example of how lucrative ESG investing can be; shares have returned 27% over the past year and 1,155% over the past 5 years.

In his 2022 letter to CEOs, Larry Fink of Blackrock harps on the importance of all corporations in all industries to take on the challenge of transitioning to a sustainable, net zero world. He states, "Engineers and scientists are working around the clock on how to decarbonize cement, steel, and plastics; shipping, trucking, and aviation; agriculture, energy, and construction. I believe the decarbonizing of the global economy is going to create the greatest investment opportunity of our lifetime. It will also leave behind the companies that don’t adapt, regardless of what industry they are in. And just as some companies risk being left behind, so do cities and countries that don’t plan for the future."

So there in lies the irony of DeSantis' decision. It will be interesting to see if the Florida Retirement System continues to hold the shares of Tesla. I haven't combed through the entire 13F to see if there are other ESG companies in there; there may be, there may not be. I do wonder what the fund managers will do going forward and will be watching for their next 13F filings in the coming months to see what moves will be made.