The Idaho House of Representatives passed three bills relating to Environmental Social Governance (ESG) standards earlier this month. ESG standards and ratings are used in business investments and credit ratings to indicate a company’s commitment to social consciousness, environmental stewardship or sustainability.
Senator Doug Ricks has helped draft and develop these bills. He’s worked with the Idaho State Treasurer, Julie Ellsworth, to push back against some of these standards and prohibit companies that use them when contracting with the state of Idaho.
If the proposed legislation passed, it would only prohibit these standards when companies dealt directly with the state.
“We don’t get in the middle of private business,” Ricks said. “If you want to support whatever you want to, everyone has their freedom of choice. We’re not getting in the middle of that. We’re only talking about the state public monies from tax dollars.”
What are ESG standards?
ESG ratings are also used in business investments and credit ratings to determine the following from a company:
— Environmental factors like a company’s carbon emissions, air and water pollution and green energy initiatives
— Social factors in how a company treats people through their policies on things like employee gender and diversity, customer satisfaction and company sexual harassment policies
— Governance factors include how a company is run by the diversity of its board members, political contributions, executive pay and who and what they lobby for
Ellsworth said the major problem with these factors is their subjective nature.
Ricks said policymakers should be making decisions about such standards, not businesses or banks outside the state.
“We don’t necessarily agree with some of their standards and some of the agenda they’re pushing,” Ricks said. “We’re pushing back and saying this is a policy decision that lawmakers should be making on some of these guidelines whereas some of the ESG standards that come through are pushed down onto people that come from outside the state. We don’t go to the right of big businesses, big banks, big companies, big people to tell us what our policy should be within the state. We feel that’s the right of people from our own state and those that have been elected to represent the people to decide the policy decisions.”
Ricks said Idaho has led the way in such legislation in the past and other states are now building on that.
“We did pass something last year that was kind of the first in the nation that gave our state treasurer a little more authority in that area and we’re just expanding on that,” Ricks said. “Idaho is one of the leaders. I know Texas has passed some legislation last year, but we’re still one of the early adopters of trying to pass legislation on this.”
Even though he opposes the use of ESG standards, Ricks is not against finding other ways to protect the environment.
“I’m not against reducing you know, some of our carbon footprint and using good common sense,” Ricks said. “We don’t want really harsh or abrupt regulations that would drastically, in my opinion, increase the cost and decrease some of the availability.”
You can read the bills passed regarding ESG and track their progress on the Idaho legislature website here.