State legislation targets company policies on ESG
Here’s a a blog by Cydney Posner about how companies are going to walk the tightrope as GOP state legislatures target ESG. Here’s an excerpt:
According to this Reuters article, some “states have unleashed a policy push to punish Wall Street for taking stances on gun control, climate change, diversity and other social issues, in a warning for companies that have waded in to fractious social debates. Abortion rights are poised to be the next frontier.”
For example, Reuters reports, last year, states passed legislation sidelining companies “that ‘boycott’ energy companies or ‘discriminate’ against the firearms industry from doing new business with the state,” contending that the “policies of such companies deprive legitimate businesses of capital.” According to a new Reuters analysis, in 2022, there were at least 44 bills or new laws in 17 states “penalizing such company policies, compared with roughly a dozen such measures in 2021….The growing restrictions show how America’s culture wars are creating new risks for some of the most high-profile U.S. companies, forcing them to balance pressure from workers and investors to take stances on hot-button issues with potential backlash from conservative policymakers.”
Some state officials accuse the targeted companies of “using the power of their capital to push their ideas and ideology down onto the rest of us.” These new prohibitions can create serious impediments to companies’ ability to conduct state business, implicating billions of dollars.