President Joe Biden has promised to veto the resolution so the rule will remain in effect.
The new rule — Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights — took effect Jan. 30 and maintains the department's position that fiduciaries may not sacrifice investment returns or assume greater investment risks as a means of promoting collateral social policy goals.
But the opposition to the rule has been fierce in Congress and across the nation, including legal challenges, like one filed in January by Republican attorneys general from 25 states.
"The proliferation of ESG throughout America is a direct threat to the American economy, individual economic freedom, and our way of life, putting investment decisions in the hands of the woke mob to bypass the ballot box and inject political ideology into investment decisions, corporate governance, and the everyday economy," the group of governors said in a policy statement Thursday.
The governors said they will protect individuals from the ESG movement by, among other actions, "blocking the use of ESG in all investment decisions at the state and local level, ensuring that only financial factors are considered to maximize the return on investment, protecting retirees and taxpayers alike."
They may also eliminate consideration of ESG factors by state and local governments when issuing bonds or prohibiting state fund managers from considering ESG factors when investing taxpayer money.
Moreover, the governors said they may ban the "financial sector from considering so called 'social credit scores' in banking and lending practices aimed to prevent citizens from obtaining financial services like loans, lines of credit and bank accounts."
Mr. DeSantis and the Republican governors of 18 other states are part of the alliance: Alabama, Alaska, Arkansas, Georgia, Idaho, Iowa, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Oklahoma, South Dakota, Tennessee, Utah, West Virginia and Wyoming.
Ali Khawar, principal deputy assistant secretary of the Labor Department's Employee Benefits Security Administration, said on Monday at Pensions & Investments' Defined Contribution East Conference in Orlando, Florida, that the political backlash to the rule is misguided.
"It's unfortunate because there's a huge amount of misinformation out there about what the final rule actually did," Mr. Khawar said. "The final rule is quite neutral. It does not mandate the consideration of ESG, it does not mandate that everyone has to buy Amazon rainforest property and make sure that they do everything to stem the cause of climate change or anything else. What it does is say that you have to be a prudent fiduciary."
Retirement industry experts also view the rule as neutral.
In a separate news release Thursday, Mr. DeSantis said Florida has led the way in combating the "pernicious effects of the ESG regime" by directing its state pension fund managers to reject ESG and "instead focus on obtaining the highest return on investment for Florida's taxpayers and retirees."
He added, "We will not stand idly by as the stability of our country's economy is threatened by woke executives who put their political agenda ahead of their clients' finances."
Florida Chief Financial Officer Jimmy Patronis announced in December that the state's Treasury department was terminating BlackRock from the management of $2 billion in the state's long-duration portfolio and its short-term investment fund for the $232.5 billion Florida State Board of Administration, Tallahassee, due to what he termed as BlackRock CEO Laurence D. Fink's "campaign to change the world" in utilizing environmental, social and governance standards."
And at the SBA trustees' meeting in January, they approved changes to the $181.7 billion Florida Retirement System's investment policy that said ESG considerations will not be included in investment management of the defined benefit plan.
