MONTGOMERY — Legislation by State Sen. Dan Roberts (R-Mountain Brook) that prohibits state contracts with businesses that boycott certain sectors of the economy based on environmental, social and governance (ESG) policies passed the Senate on Thursday.

"The purpose of what we're trying to do is we have industries in our state that can be adversely affected by things that are going on nationally," Roberts said on the Senate floor. "We're trying to make sure that they have access to the mother's milk, if you will, of capital moving forward. That's the purpose of what we're trying to do in this bill, and we're specifically trying to address corporate boycott issues and contracts in this legislation. The reason that it's timely is because of things that we see happening not just in our state but around the nation, and that's why the timing of bringing this to the floor today could not be more important and germane."

The legislation passed 27-8. All of the votes against the bill were by Democrats.

Senate Minority Leader Bobby Singleton (D-Greensboro) said the bill is "not a pro-business bill." 

"You're telling businesses in the state of Alabama that we don't want you here. More businesses are not going to want to do business in Alabama under this guidance under this particular bill," Singleton said.

 Lieutenant Gov. Will Ainsworth said on social media, "The Alabama Senate passed a bill today that requires governments to invest taxpayer dollars based on what brings the largest return on investment not crazy liberal social agendas based on woke policies." 

"The anti-ESG bill ensures the interest of AL taxpayers are always protected," Ainsworth said.

Senate Bill 261 would: 

  • 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).

The bill will now head to the House for their consideration.

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