MONTGOMERY — Legislation by State Sen. Dan Roberts (R-Mountain Brook) prohibiting state contracts with businesses that boycott certain sectors of the economy based on environmental, social and governance (ESG) policies passed the House Financial Services Committee on Wednesday.
Senate Bill 281 (SB261) has remained one of the more hotly debated subjects during this legislative session.
Proponents say the bill would protect Alabama from "woke" corporations exerting influence in the state. In contrast, opponents say it will negatively affect the economy by chasing away large industries from operating in the state.
The legislation passed the Senate last week with a vote of 27-8. All of the votes against the bill were by Democrats.
Prohibit a governmental entity from entering into a public contract for goods or services with certain companies or businesses that engage in the economic boycott of businesses in certain sectors and industries; that fail to meet or commit to meet certain environmental standards; that fail to meet or commit to meet certain corporate governance criteria; or that fail to facilitate certain activities.
Prohibit any company in the state from being required by a governmental entity to engage in economic boycotts or other actions that further social, political, or ideological interests, including economic boycott criteria.
Prohibit any company in the state from being penalized by a governmental entity for declining to engage in economic boycotts or other actions that further social, political, or ideological interests, including economic boycott criteria.
Require the Attorney General to seek to prohibit the adoption of federal laws or actions that may penalize, inflict harm on, limit commercial relations with, or change or limit the activities of companies or residents of the state based on the furtherance of economic boycott criteria.
Authorize the Attorney General to investigate violations of and enforce this act.
The prohibition on economic boycotts by companies doing business with the state of Alabama does not apply to a "contract related to the issuance, incurrence, or management of debt obligations, to the deposit, custody, management, borrowing, or investment of funds, or to the procurement of insurance or other financial products, or a contract that would prevent the governmental entity from obtaining the supplies or services to be provided in an economically practicable manner," according to the legislation.
ESG scoring evaluates how a corporation aligns itself with social goals beyond earning a profit for its shareholders. These goals often pertain to environmental sustainability and advocacy for specific social movements, and commitment to "diversity, equity and inclusion" (DEI).
SB261 received a favorable report from the House Financial Services Committee on Wednesday.
There are five legislative days remaining in the session. However, leadership typically reserves one day to address any potential vetoes by Gov. Kay Ivey. House leadership would have to prioritize SB261 for it to receive final passage before the session ends.
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