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 Fiscal Responsibility and Economic Development Committee on Wednesday.
A previous version of the legislation was pulled from the committee agenda last week over pushback from big business interest groups, but the legislation passed out of committee on Wednesday along partisan lines after a substitute amendment was placed on the bill.
Roberts said during the meeting, "We've discussed this at great length... [A]s we filed this bill, it promoted discussion with businesses around the state."
"After I don't know the final number of revisions that we've come to. We've finally come to an agreed-upon bill," he said. "It deals with a topic that is taking place throughout the United States today. We're really trying to specifically focus on corporate boycotts. With that, we're fighting first to ensure Alabama tax dollars will not be used to subsidize private entities that boycott law-abiding businesses for reasons related to arbitrary and subjective standards. Secondly, it prevents businesses from being forced by a governmental entity to engage in other economic boycotts."
State Sen. Sam Givhan (R-Huntsville) said the legislation is "not taking anybody's constitutional rights away."
"It's fairly simple. An example is if you're a lender, if you're a bank and you want to do business with Alabama, and you refuse to finance somebody solely because of, and that solely is an important word in there, because they're an arms manufacturer, or because they're a coal manufacturer, or because they provide beef products, and you won't do business with them for those reasons then the state of Alabama isn't going to do business with you," Givhan said. "You can knock yourself out and do that all day long, but you're not going to do business with the state of Alabama."
State Sen. Kirk Hatcher (D-Montgomery) said at the meeting, "My concern is if the business community signed off on it, I'm very concerned about what that looks like for businesses we are trying to attract to the state."
"I'm just not as clear with hypotheticals as it would be if I had some sort of evidentiary information that tells me this is something that's happening," Hatcher 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.
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).
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