On Thursday, the Alabama Senate passed legislation that would require companies that want state of Alabama contracts to forgo any sort of ESG (environmental, social, and governance) woke corporations or ESGs.
Senate Bill 261 (SB261) is sponsored by State Senator Dan Roberts (R-Mountain Brook). It is carried in the House by Rep. Chip Brown (R-Hollinger’s Island). The anti-ESG legislation would prohibit state and local governments from entering into certain contracts that boycott businesses in certain sectors or based on certain environmental or corporate governance criteria.
SB261 has been billed as the strongest anti-ESG legislation in the nation. Though the legislature is split along partisan lines on this legislation, both sides elected not to debate the issue in the House of Representatives. Instead, they advanced the bill directly to a vote when it came up on Wednesday’s special-order calendar.
The bill prohibits governmental entities from entering into certain contracts with companies that boycott businesses because the business engages in certain sectors or does not meet certain environmental or corporate governance standards, or does not facilitate certain activities. The legislation authorizes the Attorney General to take action to investigate and enforce this act.
“I appreciate the support of my colleagues in the Senate for working to pass this legislation,” Sen. Roberts told reporters. “The Alabama Senate has made it clear that we want businesses to focus on growing and expanding and not working to push any political agenda with left-wing ESG policies.”
If a company engages in social activism banned by the legislation, then it can’t do business with any local or state government.
According to the bill, “This bill 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.”
Companies would have to sign a verification that it does not engage in boycotts of other companies and industries. Governments can opt out of this provision if they can prove that it would have an adverse economic effect on that government if they can’t do business with that company.
The bill states, “The Attorney General shall seek to prohibit the adoption of federal laws, rules, regulations, bulletins, executive orders, or other federal actions that may penalize, inflict economic harm on, limit commercial relations with, or change or limit the activities of a company in the state or a resident of the state based on the furtherance of economic boycott criteria or other similarly oriented rating.”
It also protects companies from state or local governments trying to pressure them company into adopting woke political action.
“No company in this state shall be penalized, have economic harm inflicted on it, have commercial relations limited, or have the activities of the company changed or limited by a governmental entity because the company will not engage in economic boycotts; will not establish or implement policies, procedures, guidelines, rules, reports, products, services, notices, disclosures, or rates or pricing; will not provide or submit answers to surveys or other information requests or disclosures; will not invest in or divest of certain securities, stocks, bonds, bills, partnerships, or other investment arrangements; or will not initiate other corporate or business practices that further social, political, or ideological interests including, but not limited to, economic boycott criteria or other similarly oriented rating.”
“We have industry in or state that can be hurt by things going on nationally,” Roberts explained on the Senate floor. “We are trying to put them in position so they can thrive. We are trying to make sure that they have access to the mother’s milk of capital in the future.”
Sen. Bobby Singleton (D-Greensboro) brought an amendment to the committee substitute of the bill.
“It was given to me by the governor’s office,” Singleton said. “The finance department, they just wanted to make sure that they are protected in dealing with the state’s debt obligations.”
Roberts accepted the Singleton amendment as friendly.
“I think this is an anti-business bill,” Singleton said. “You are telling people that do business in the state of Alabama that you can’t have a social conscience.”
“This is not a pro-business bill,” Singleton said. “Dan, you are wrong on this one. I will tell you, Dan, that you are wrong on this one.”
“You can’t listen to Fox and decide what you are going to do,” Singleton continued. “We can’t be Florida 20. We won’t be able to recruit with this on the ground. This is a threat to business. If I don’t sign this paragraph, I can’t do business in Alabama.”
Senate President Pro Tempore Greg Reed (R-Jasper) said, “This is a difficult topic. This is one that is at a national level that we have to deal with.”
Sen. Sam Givhan (R-Huntsville) said, “We did have great dialogue. We had businesses across the gamut in the state of Alabama. We sat down in a room with them, and they presented us with their redlines.”
Sen Robert Stewart (D-Selma) said, “Corporations do have an obligation to be good actors.”
Givhan responded, “Their job is to maximize shareholder wealth.”
Givhan explained the Singleton amendment, which exempts the State Finance Department from following this when refinancing debt obligations.
“Debt obligations – that is targeted at the bond market,” Givhan said. “There is not a lot of businesses in that space. We wanted to make sure that we weren’t shooting ourselves in the head. Some think we may have opened the barn door too much.”
SB261 passed the Alabama House of Representatives 74 to 27. It had previously passed the Senate by a vote of 27 to 8. The legislation now goes to the Governor for her consideration.
Wednesday was day 28 of the 2023 Alabama Regular Legislative Session.
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