MONTGOMERY — Legislation by State Sen. Dan Roberts (R-Mountain Brook) prohibiting state contracts with businesses that boycott specific sectors of the economy based on environmental, social and governance (ESG) was signed into law by Gov. Kay Ivey on Tuesday.
The anti-ESG bill has caused uproar in the business community and with Democratic lawmakers. Proponents say the bill would protect Alabama from "woke" corporations exerting influence in the state. In contrast, opponents say it would negatively affect the economy by chasing away large industries from operating in the state.
“No matter how much Corporate America and the national media want to push their social issue of the day on folks, the state of Alabama will continue protecting both our values and our businesses,” Ivey said. “Alabama citizens, in no way, shape or form, want ESG influencing business in our state, and this legislation most certainly sends that message. Alabama – where businesses do business and government serves her people! We call it common sense.”
The bill passed the legislature last week with a vote of 27-8. All of the votes against the bill were by Democrats, with the one exception being State Rep. Cynthia Almond (R-Tuscaloosa).
SB261 will:
· 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."
To connect with the author of this story, or to comment, email craig.monger@1819news.com.
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