Influential members of Alabama's business community don't want state lawmakers to prohibit government entities from entering into contracts with companies that use environmental, social and governance (ESG) criteria to discriminate in business practices. 

State Sen. Dan Roberts (R-Mountain Brook) filed SB261 last week, which would place restrictions on private businesses seeking contracts with the state from using ESG scores to leverage economic power for political and ideological objectives.

A public hearing scheduled for the bill tomorrow was canceled. However, sources tell 1819 News there could be a hearing and a vote next week.

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).

Organizations, such as MSCI, award ESG scores to corporations supposedly based on their adherence to ESG values. Large asset management groups, like BlackRock, Vanguard and State Street, and banks, such as JPMorgan and Bank of America, use ESG ratings to choose where to direct capital.

Conservative critics have called ESG investing a "wokeness report card" and compared it to China's social credit score system.

State Rep. Chip Brown (R-Mobile) filed legislation in March to prohibit state and local agencies from considering ESG criteria when awarding public contracts. Roberts, Arthur Orr (R-Decatur), Gerald Allen (R-Tuscaloosa), Steve Livingston (R-Scottsboro), Larry Stutts (R-Tuscumbia), Shay Shelnutt (R-Trussville) and David Sessions (R-Grand Bay) filed another ESG-related bill in April.

The Senate bill would've prohibited all government entities "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."

It would also prohibit businesses from enacting penalties for not engaging in actions to further social, political or ideological goals, including economic boycotts, and require Alabama's attorney general to refuse to adopt federal laws that require businesses to engage in economic boycotts.

On Tuesday afternoon, director of Troy's Johnson Center for Political Economy Allen Mendenhall spoke to the Alabama Senate Republican Caucus about the danger ESG presents to the state. According to Mendenhall, he was speaking in his capacity as a citizen and not as a representative of Troy University. Moments before he was slated to speak, the bill was pulled.

"I look forward to the day when Alabama Republicans join their colleagues in other red states to stand on principle against ESG, which targets our state's leading industries from timber, forestry, gas, and fishing to agriculture, firearms, steel, automobile manufacturing, mineral extraction and more," Mendenhall told 1819 News.

According to an email from BCA's manager of Governmental Affairs William Newman to the council's Tax and Fiscal Policy Committee, the BCA opposed the Senate bill and found it contradicted its legislative policy agenda. 

"After discussing and looking through our 2023 Legislative Policy Agenda, we believe that the 15th bullet in the Tax and Fiscal Policy Section provides a basis for us to engage on this legislation," wrote Newman.

The section of the agenda Newman referred to in the email reads:

"The BCA opposes policy proposals that would create uncertainty or instability for prospective businesses regarding the state's economic development initiatives and tax laws, and result in the weakening of the state's capacity to compete for and attract new jobs and industry."

To connect with the author of this story or to comment, email or find him on Twitter and Facebook.

Don't miss out! Subscribe to our newsletter and get our top stories every weekday morning.