Florida Pension Officials Step Up Corporate Scrutiny

TALLAHASSEE — Florida will expand a look at companies whose shareholders include the state pension fund, after targeting corporate initiatives that Gov. Ron DeSantis and his allies deem part of “woke” ideology.

DeSantis and members of the state Cabinet on Wednesday backed a resolution that, in part, expanded a pool of law firms retained by the state in the effort to scrutinize corporate policies. Currently, five firms are retained.

Asked after a Cabinet meeting if the changes are intended to send a warning to publicly traded companies, Chris Spencer, executive director of the State Board of Administration, which oversees Florida’s investments, said there isn’t a short list of targeted companies.

“I would say we always are very proactive and transparent about our intent to be a very active shareholder. And we’ve done that in the past,” Spencer said. “I think you’re going to see a lot more of that again from us.”

Corporate governance principles targeted could range from misstatements of facts that result in lost value to proxy-voting standards.

DeSantis and Cabinet members are trustees of the State Board of Administration. The resolution allows the State Board of Administration to initiate lawsuits by giving the trustees a five-day notice rather than waiting for approval from the trustees.

The resolution also establishes a litigation reserve fund of about $20 million.

“You’ll see us be more aggressive on litigation around areas where we think that we can add material value, long-term material value to shareholders,” Spencer said.

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“And the essence of this whole initiative is to be very clear that this is going to be a direction that we’re going down,” Spencer continued. “And ultimately the academic research, empirical data supports that when companies adopt very robust corporate governance policies, that ultimately derives a much higher shareholder value for those investors.”

Previously the state has targeted corporate initiatives involving “environmental, social and governance” and “diversity, equity and inclusion” standards. DeSantis said Wednesday that ESG “is basically dead now around the country.”

The resolution came after the trustees ratified a class-action lawsuit filed last month by Attorney General James Uthmeier that alleges Target Corp. did not properly disclose to investors the risks of a 2023 LGBTQ Pride campaign that drew a consumer backlash and caused a drop in the retailer’s stock price.

“If companies are going to go out and focus on radical, ideological politics and not getting revenues, then we need to hold them accountable,” Uthmeier said.

DeSantis pointed to the state trying to block companies from catering to “any fringe left wing group or activist.”

“People are free to do that on their own time. But if you have a fiduciary obligation to represent the shareholder interest, those tangents are not fulfilling that fiduciary obligation,” DeSantis said. “So, we sitting on the board, we have every right to ensure and take steps to make sure that these companies are fulfilling those obligations, because ultimately, it’s the retired police officers, firefighters, teachers, who depend on this pension fund.”

The Uthmeier-led lawsuit is one of at least three similar cases against Target in Florida.

Responding to one of the other cases, Target in January 2024 said it “repeatedly warned investors of the risk” of consumer boycotts because of its initiatives, including the 2023 Pride campaign and argued that “disagreeing with Target’s business judgment does not give rise to an actionable claim under the securities laws.”

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