As multiple Republican-led states across the country introduce and pass legislation to ban the practice of environmental, social, and corporate governance (ESG) policies among private companies, questions have arisen regarding the potential costs of the implementation of such legislation.
As reported by Just The News, one such bill will soon be taken up by the Arkansas State House of Representatives, where lawmakers are currently in recess. An amendment was introduced by the bill’s sponsor to ease the potential financial costs for the state’s retirement system in the event that it is required to divest from pro-ESG companies.
“It says in the amendment that they do not have to divest as long as they can prove that divesting will cost them money,” said State Rep. Jeffrey Wardlaw (R-Ark.). “And then they will divest at a time when it does not cost them money.”
“Basically, this bill just says you can’t discriminate against the firearm industry, the ammunition industry or the fossil fuel industry in Arkansas,” Wardlaw added. “If you do, we won’t put any state dollars into your business.”
The legislation, House Bill 1307, would also require the State Treasurer to maintain a list on the official government website of any and all companies that comply with ESG standards.
A similar bill, House Bill 1008, passed in the Indiana State House of Representatives. Meanwhile, North Dakota’s State House rejected a similar bill last month, after testimony from several bankers raised concerns about the costs of the bill.
“The greatest risk to North Dakota banks are the costs associated with regulatory compliance and litigation arising from these regulations, whether founded or unfounded,” said Rick Clayburgh, president and CEO of the North Dakota Bankers Association. It had been estimated that the bill would cost the state at least $1.7 million.
While 13 states have already introduced anti-ESG bills this year, a report by the Harvard Law School on Corporate Governance expects that total to increase in the coming months and into 2024.
“We expect more states to propose or adopt anti- (and pro-) ESG state laws, particularly as the 2024 U.S. presidential election approaches and political agendas solidify,” the report declared, “and as the global ESG regulatory framework, including a growing web of EU-related ESG measures, comes into greater focus.”