FL CFO Patronis: S&P Came ‘to Their Senses,’ Leftwing ESG Ratings Not Welcome in Sunshine State

AP Photo/Steve Cannon, File

Florida Chief Financial Officer Jimmy Patronis, a Republican, told RedState he was thrilled to learn about Standard & Poor’s Aug. 4 decision to drop its Environmental, Social Governance scoring from its credit ratings.

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“Well, I know this, they’ve gotta eventually come to their senses and realize that that push in ESG is driving up everybody’s cost of business,” said Jimmy Patronis, who was appointed CFO by Republican Gov. Rick Scott to fill a vacancy in 2017.

Patronis said he had opposed the ESG ratings attached to credit ratings because they are a needless distraction from the real goal, which is getting the best return for public funds, and the lowest costs for public financing.

“The financial markets are feeling it, the insurance markets are feeling it, and who’s feeling it most is the middle class,” the Panama City native said. “You know, ESG? It’s really a hidden tax, a wolf in sheep’s clothing.”

In its statement, S&P said in part:

S&P Global Ratings remains committed to providing the market with transparency on how and when environmental, social and governance factors influence our assessment of creditworthiness. However, effective immediately, we are no longer publishing new ESG credit indicators in our reports or updating outstanding ESG credit indicators.

Patronis struck a blow against ESG in December when he pulled $2 billion from the leading advocate for woke-investing, BlackRock.

Working with the legislature and Republican Gov. Ron DeSantis, the CFO said he led the change in how the Sunshine State manages its funds, making it illegal for its fund managers to use ESG considerations. He said:

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“We’ve changed our laws to retaliate against the nonsense of ESG.We’ve changed our investment strategies to make sure we’re getting the maximum return on investment, and we’ve done it also with moving our investments—teaching these guys a lesson.”

“If you’re going subscribe to those types of doctrines, Florida’s not a place you want to do business,” the CFO said.

Standard & Poor’s was created in 1941, when H.V. and H.W. Poor Company, which analyzed railroads, merged with the Standard Statistics Bureau, which analyzed non-railroad companies. The new company became one of the top rating services for credit instruments and other securities. In 1966, McGraw-Hill acquired S&P. The company launched its S&P 500 stock index in 1957.

In 2021, S&P initiated its ESG ratings, which awarded scores based on how public and private entities addressed social factors, waste, pollution, and climate transition risks. The company also offered ESG evaluations to companies looking to trumpet their efforts.

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Although the wording was nebulous, S&P came close to letting the cat out of the bag when it gave this description:

“Social capital, including consumer and citizen relationship issues, such as mis-selling of products linked to environmental and social factors, as well as socioeconomic and demographic issues.”

In its “ESG In Credit Ratings July 2023” report,” S&P demonstrated its willingness in June to punish and reward 16 public and private entities depending on their putting their toe on the party line, which was down from 25 in May.

Nine of the actions were based on governance factors, four based on social factors, and three based on environmental factors, the report said. Eight of the negative actions were from North America.

In the trailing 12 months, the report said out of 144 total ESG-related actions, 104 were negative—72 percent. Public financing accounted for 32 of those demerits and 23 were private companies.

The measure of S&P’s ESG willingness to bully participants in the credit markets is in the numbers. In the previous year, there were seven months when the negative actions reached 15 or more.

On the other hand, the number of positive actions betrays S&P’s failure to mold the credit markets to its utopian vision. (Punchline: But, it wasn’t for lack of interest.)

August 2022 was the only month there were more than 10 positive rating actions.

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Patronis, whose family operates Panama City’s Capt. Anderson’s Restaurant, said in the end, the market rejected the services Standard & Poor’s was selling.

“I’ve been, there’s a restaurant business for 30 years, and people get in the restaurant business all the time, and they think: ‘I’ve got this amazing restaurant concept,’” he said.

“Well, they don’t go and do their homework, and what happens is they go out of business because they’ve created a product nobody buys, nobody enjoys, nobody likes to sit down and eat,” the former state representative said.

“This is no different than ESG,” he said.

“They were convinced it was just the absolute best thing for the market, the best thing for the consumers, but you know what? Eventually, nobody’s going do business with you anymore.”

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