A slate of bills known as “The Game Plan” unanimously passed the Legislature and was signed into law by Gov. Kay Ivey. This package of laws will have a generational impact on the state that will positively transform the lives of millions of our citizens.
But the ink was barely dry on the documents when state Sen. Dan Roberts, R-Mountain Brook, introduced SB261, an anti-ESG bill that, if enacted into law, will negatively impact businesses by entangling them in a web of red tape and government restrictions.
ESG is loosely defined as Environmental, Social, and Governance principles for investing.
According to global powerhouse PwC, “ESG is more than good intentions; it’s about creating a tangible, practical plan that achieves real results.”
The international professional services company states that the success of ESG investing “is not about climate change, diversity and disclosures alone,” but enabling investors to tackle the biggest challenges of today – “and capture the best opportunities of tomorrow.”
The fact is that ESG has become, of late, another hobgoblin in “anti-Woke” spellbinding fantasies that seek to punish those who choose to ensure their investment dollars encourage companies to act ethically and responsibly. Many mutual funds, brokerage firms, and robo-advisors now offer investment products that employ ESG principles.
The fundamental driver behind the anti-ESG movement are legacy fossil-fuel states and companies that fear the public is trending away from their products because of the harm they do. Like so many things in politics, when the onion is peeled, it’s discovered that it’s not an onion but a propaganda campaign to protect someone’s special interest. So much for truth in governing.
Once upon a time, conservative Republicans actively worked to promote free markets and to limit the size and scope of government. Bills like SB261 not only hinder free choice in market investment but also dramatically increase the government’s reach.
Under Roberts’ legislation, the Attorney General’s Office would be tasked with investigating business entities that might use ESG principles of investing to ensure they comply with the state’s anti-ESG laws. The legislation would give the attorney general investigatory and enforcement powers on private companies’ profit-making decisions.
How does Roberts’ bill limit government size and scope when a company is threatened with prosecution for investing in public markets?
These types of laws are not conservative or Republican. They are socialist because the central government dictates how a person or business entity can participate in the public marketplace.
What we see with legislation like SB261 is what conservative Nobel Prize–winning economist James M. Buchanan called “managerial socialism,” which argues that central planning by the government can organize affairs more rationally than market forces.
Buchanan argues that the conventional threat to freedom from managerial socialism is central planning. Buchanan also notes that “parental socialism,” which he describes “as the willingness among many to allow the government to take control of their lives,” is dangerous to personal freedom.
Sadly, these two types of socialism have emerged among some Republican lawmakers and thinkers as rational theories of governing.
Roberts’ bill may be well intended, but as anyone who observes government knows, it’s the unintended consequence that are the killers. Or, as my old pappy would say, “Son, the road to hell is paved with good intentions.”
Around the Statehouse, there has been expressed concern that Roberts acted without seeking advice from his constituents or gaining support from the business community. As one principal said, “He’s starting a war on Alabama contractors and other enterprises and setting a dangerous precedent regarding government mandates.”
Perhaps without irony, Roberts’ campaign contributions came from a majority of pro-business PACs. Many of the companies that stood up and supported him while he faced a tough primary challenge from Dr. Brian Christine in the last election cycle are now targets of his legislation.
The Birmingham metropolitan area that Roberts represents is home to a vibrant and diverse business community. Prohibiting these businesses from investing in companies with ESG policies could impact investment portfolio diversification and risk management strategies, potentially increasing risk and reducing returns. This will not, and should not, be an easy win for Roberts.
This anti-ESG legislation directly contradicts and is an affront to the spirit of The Game Plan to create a brighter future for our state while suffocating businesses with bureaucratic red tape.