One of the basic tenets of the free market is choosing who you want to do business with, and who you don’t.
But choosing not to do business with certain entities in the state could now leave companies out of the running for state contracts, as it exerts its own power to boycott businesses.
Gov. Kay Ivey signed SB261 by Sen. Dan Roberts, R-Mountain Brook, into law Tuesday and emphatically supported the law, which is one of the broadest anti-ESG bills in the country.
“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.”
ESG stands for environmental, social and governance standards, which has become part of what companies look at when choosing who to do business with. Supporters of the standards say the standards ensure that companies are looking beyond the bottom line to do business with responsible and sustainable companies.
Some conservatives though have referred to the standards as a “woke report card.”
The bill is essentially a boycott of a boycott.
The legislation sets out particular sectors that cannot be “economically boycotted” by other companies who hope to contract with the state.
The sectors include fossil fuels, timber, mining, agriculture and firearms and ammunition manufacturers.
It also precludes companies from boycotting companies who are not committed to meet environmental standards, particularly regulations to offset, reduce or eliminate greenhouse gas emissions. Or companies that don’t meet certain composition, compensation, or disclosure criteria. Or companies that don’t facilitate access to abortion, sex or gender change surgery, medications, treatment or therapy.
“We’re trying to ensure that Alabama’s tax dollars will not be used to subsidize private entities that boycott law-abiding businesses for reasons relating to arbitrary or subjective standards,” Roberts said. “I think we’re starting to see it on a national front … We’re trying to stop is a movement that’s going on in the United States that’s commonly referred to with environmental social governance.”
Democrats brought concerns that the state could run afoul of federal law. The bill specifically orders the attorney general to “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.”
Sen. Vivian Davis-Figures, D-Mobile, said the bill steps on the first amendment rights of companies to do business, or not do business, with who they please.
Some of the state’s largest business entities and lobbyists including Regions, RSA and the Business Council of Alabama factor in similar criteria when choosing who to do business with.