At last week’s States and Nation Policy Summit, the American Legislative Exchange Council (ALEC) doubled down on its latest strategy of protecting the fossil fuel industry by blacklisting “woke” companies that embrace climate protection goals.
Two ALEC panels comprised of industry lobbyists and Republican legislators, its task forces on Energy, Environment, and Agriculture (EEA) and Commerce, Insurance and Economic Development (CIED), voted to adopt the model Eliminate Political Boycotts Act, the Center for Media and Democracy (CMD) has learned.
Originally called the Eliminate Political Boycotts Act, but renamed at the summit, the model bill would bar companies with 10 or more employees from receiving state contracts if they take into account any “social, political, or ideological interests” to limit their commercial relations with fossil fuel, logging, mining, or agriculture businesses—and instructs legislatures to “insert additional industries if needed,” CMD first reported.
The radical measure would authorize state governments to scrutinize corporate speech for any “evidence” that a company is taking into account environmental, social, and governance (ESG) factors—along with issues of diversity, equity, and inclusion (DEI)—in its business practices. It would prohibit state contracts based on a company’s “branding, advertising, statements, explanations, reports, letters to clients, communications with portfolio companies, statements of principles,” and so forth, or even a company’s association with “any coalition, initiative, joint statement of principles, or agreement” that the government deems unacceptably “woke.”
ALEC has long carried Big Oil’s water, including taking at least $1.7 million from Exxon and its foundation as a “fund allocator” in the American Petroleum Institute’s multimillion dollar plan to block the United Nations’ Kyoto protocol to reduce greenhouse gas emissions.
While the agenda for the EEA Task Force meeting didn’t list a sponsor, Texas state Representative Dennis Paul (R) introduced the model bill, according to an email Jason Isaac, director of Life:Powered at the Texas Public Policy Foundation (TPPF), sent to task force members encouraging them to vote in favor of it.
TTPF has served as a major player in the fossil fuel industry’s campaign to deny climate change and block climate action, and has received more than $8.9 million in funding from oil giant Charles Koch’s foundation and funding vehicles Stand Together Fellowships and Stand Together Trust since 2004, as well as funding from Exxon Mobil, Chevron, and Peabody Energy.
In voicing support for a 2021 bill passed in Texas that is similar to ALEC’s Energy Discrimination Elimination Act, Paul argued that it was important to “stand up to this wokeness.”
Isaac also promoted that bill before the EEA Task Force met at the 2021 States and Nation Policy Summit, noting that it offered an “opportunity to push back against woke financial institutions that are colluding against American energy producers.”
After ALEC’s EEA Task Force endorsed the Energy Discrimination Elimination Act in December 2021, Oklahoma, Kentucky, Tennessee, and West Virginia passed similar bills in 2022.
In addition to TPPF’s Life:Powered, other right-wing groups promoted the Eliminate Political [now Economic] Boycotts Act “based on anti-BDS legislation supported by ALEC regarding Israel” including: the State Financial Officers Foundation (SFOF), the Heartland Institute, Heritage Action for America, Foundation for Government Accountability, Independent Women’s Forum, America First Works, and Consumers’ Research.
Consumers’ Research and the Foundation for Government Accountability were both listed as vice chairman-level sponsors of the meeting last week, CMD reported. Consumers’ Research Executive Director Will Hild and SFOF members Utah State Treasurer Marlo Oaks and Florida’s Chief Financial Officer Jimmy Patronis spoke on “ESG Initiatives” at the opening breakfast meeting.
Over the summer, ALEC also amended its State Government Employee Retirement Protection Act at its annual meeting to hamstring public pension funds. Initially passed in March during a special meeting of its Tax and Fiscal Policy Task Force, the model policy prohibits anyone managing state, local, or university public pensions from considering the climate emergency or other social or political factors when investing pension funds.
Socialism in Sheep’s Clothing?
In “How States Fight Back Against ESGs,” a workshop that followed the opening breakfast, Hild, Andy Puzder, a visiting fellow in business and economic freedom at the Heritage Foundation, and Jessica Anderson, executive director of Heritage Action, further pushed the model bills while manufacturing a crisis around ESG investing, according to notes and materials obtained by CMD.
Puzder, who has been involved in drafting all three of ALEC’s anti-ESG model bills, sought to amp up the rhetoric in claiming that ALEC and Heritage are facing a monumental moral fight of historic significance.
“My father’s generation’s challenge was the Nazis, who were, by the way, very proud socialists,” Puzder said. “The challenge of my generation was the communists, who were, of course, very committed socialists. The challenge of your generation is ESG investing,” he warned, adding: “ESG investing is socialism in sheep’s clothing.”
In his comments, Hild focused his ire on the concept of net zero—the goal of cutting greenhouse gas emissions to as close to none as possible—calling it “absurd” and “suicide” for the economy. In October, 19 Republican state attorneys general launched an investigation into the ESG investing of six banks and their involvement in the United Nations’ Net-Zero Banking Alliance.
On Dec. 7, Vanguard, the world’s second-largest asset manager and a target of anti-ESG activists, announced that it was exiting the Net Zero Asset Managers (NZAM) initiative, reportedly due to right-wing political pressure. Founded in 2020, the international alliance of 291 participants has agreed to reach net zero carbon emissions by 2050.
During the workshop, Hild touted motions that Consumers’ Research and 13 Republican attorneys general filed with the Federal Energy Regulatory Commission (FERC) earlier in the week asking it to prevent Vanguard from purchasing large amounts of public utility stocks.
“As legislators, obviously your state AGs and your treasurers look to you to have their back and resource them in this fight,” Hild said. “They are well positioned to push back against the federal government.”
He also asked ALEC lawmakers to explore their committee subpoena powers to investigate how banks and asset managers are incorporating ESG into their investment strategies.
The Texas State Affairs Committee led by ALEC member and state Senator Bryan Hughes utilized these powers “to make BlackRock produce records and to testify under oath in front of the committee,” Hild noted. Hughes is now asking BlackRock—along with Vanguard Group Inc., State Street Corp., and Institutional Shareholder Services Inc.—to appear at a Dec. 15 hearing, Politico reported.
Heritage Action’s Jessica Anderson offered her organization’s support in helping ALEC legislators to move the model bills through their state houses. Heritage Action employs 10 regional lobbyists for the states listed in a pamphlet it distributed at the meeting.
Anderson also encouraged lawmakers to partner with state attorneys general and state treasurers to get the model bills passed and promoted its campaign site, “esghurts,” as a resource. The two model bills it’s pushing are virtually identical to ALEC’s.
Now that Heritage is working closely with ALEC, SFOF, and TPPF as part of a larger coalition committed to fighting ESG initiatives, it expects to see up to 20 states introducing anti-ESG legislation in 2023, Anderson said.
“We work with [state lawmakers] to say, ‘OK, can we bring in an expert to brief you in your caucus? Can we show up to committee hearings? Can we help bring support, media opportunities, op-eds?… There’s going to be opposition, so how can we help you fight back?'” Anderson explained.
A survey recently published by ROKK Solutions and Penn State University “found that neither Republican nor Democratic voters support policymakers’ potential legislative efforts to curb ESG initiatives.” The survey reports add that the “consensus among voters surveyed was that companies should be able to exercise discretion to invest in ESG initiatives that benefit society without government interference.”
ALEC is a pay-to-play operation in which state legislators and corporate lobbyists meet behind closed doors to write model legislation that advances a radical right-wing, pro-corporate, and pro-Republican agenda on everything from suppressing voter access and denying climate change to crushing unions and undermining public education.
The push for more effective anti-ESG strategies and support for the newly named Eliminate Economic Boycotts Act was but one of several key agenda items at ALEC’s multi-day annual summit, which took place in Washington, D.C. this round.
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