House lawmakers Thursday gave the green light to a trio of bills allowing the state to boycott businesses and financial institutions which follow environmental, social and governance standards, known as ESG.
The standards are guidelines that companies adopt for the way they conduct themselves, or who they choose to do business with. In the financial sector, the standards can guide decisions on where investments may or may not be made.
The bills sailed through on a wide margin, with Democrats and a handful of Republicans voting no on each. Rep. Barbara Ehardt (R-Idaho Falls) sponsored two and fought back against arguments that the legislation allows the state to pick winners and losers.
“We are not telling businesses how to run their business,” she said on the house floor. “There’s nothing remotely in here that says that, that would be a misdirection, a false narrative.”
Nationwide, Republicans have attacked these standards as ‘woke ideology.’ Ehardt says the state needs to protect its industries targeted by ESG reforms.
The bills prohibit the state from doing business with any company publicly using ESG standards; meant to disincentivize their adoption. Some companies the bills are meant to protect, though, have embraced the standards.
“The very industries we’re professing to protect are against this bill,” noted Rep. Greg Lanting (R-Twin Falls). “It makes me wonder if we’ve thought this through, if the very ones we’re protecting say, ‘don’t do this.’”
Some legal experts say this type of legislation creates legal risk for states. David Berger is a lawyer who co-authored a paper calling anti-ESG policies a liability trap.
“The fiduciaries themselves are caught between a rock and a hard place. What is it that they can invest in and what can’t they invest in? A second issue is whether or not they’re maximizing returns, or what is the purpose of the fiduciaries,” he said.
Berger said limiting who a state can do business with leads to higher costs for taxpayers, as evidenced in Texas, where the policies have driven state lending to smaller institutions with higher rates.
“Where Texas kind of went wrong – and I don’t think it was nearly as bad as some people say,” Ehardt told House colleagues. “They had no exemption language. We have given that ability to our state treasurer, and if it’s something that is important to the state of Idaho, we have the ability to create an exemption: incredibly important.”
The third of the three bills, sponsored by Rep. Jason Monks (R-Meridian), prohibits the state from using ESG standards in its purchasing decisions. House Bill 191 passed with the widest margin of the three, 59-10.
This type of legislation is popping up across the country, Berger said. He finds it ironic.
“They say ‘you shouldn’t boycott, but we’ll boycott you.’ And you shouldn’t take environmental, social and governance issues into account, But we’re going to,” he said.
The three bills now head to the Senate.
Nationwide, Republicans have attacked these standards as ‘woke ideology.’ Legislation sponsor Rep. Barbara Ehardt said the state needs to protect its industries targeted by ESG reforms.