Texas House Bill HB982

Texas 2023 - 88th Regular

• Filed: 12/12/22

Caption

Relating to a prohibition on contracts with certain companies that use certain environmental, social, and governance criteria.

Impact

If passed, HB 982 will amend the Government Code by adding a new chapter that restricts governmental entities from entering into contracts valued at $100,000 or more unless companies certify that they do not employ prohibited ESG criteria. This shift could significantly influence the relationship between state funding and corporate responsibility, as it discourages alignment with commonly embraced ESG practices that inform many large companies' investment strategies. Supporters of the bill argue it protects Texas' economic landscape from what they see as external political influences that could impair local businesses' operations.

Summary

House Bill 982 aims to prohibit contracts between governmental entities and companies that utilize certain environmental, social, and governance (ESG) criteria deemed detrimental to the Texas economy. The legislation specifically targets companies that evaluate business decisions or investment strategies based on these criteria, which are perceived as driven by political agendas rather than shareholder interests. By mandating that contracts with governmental entities include a verification clause to ensure compliance with this prohibition, the bill seeks to reshape the landscape of public contracting in Texas.

Sentiment

The sentiment surrounding HB 982 reflects a broader national debate on the role of ESG in corporate governance and public contracting. Proponents view the bill as a necessary defense against perceived overreach by corporate interests engaging in 'woke capitalism.' They believe it will protect Texas businesses and promote a more business-friendly environment. Conversely, opponents see the bill as an attack on corporate social responsibility initiatives, which aim to create sustainable and equitable practices. Critics are concerned that this legislation may undermine efforts to address pressing social and environmental issues.

Contention

Notable points of contention include the interpretation of what constitutes 'prohibited ESG criteria' and the implications of limiting local entities from selecting vendors based on comprehensive evaluation criteria that may include ESG considerations. There are fears among some groups that the bill may reduce the ability of local governments to foster social responsibility within their procurement processes. Additionally, the legislation's potential to affect how Texas companies engage with larger national and global markets, especially those increasingly attentive to ESG factors, raises further concerns among opponents, who argue it may isolate Texas businesses from broader economic trends.