As the fight against the Coronavirus continues, infection and death rates are still rising at alarming rates. These rates are particularly high in states like Texas and Florida, where governments are not only doing little to fight the coronavirus, but are actively making it more difficult for private businesses to do so.
Texas Governor Greg Abbot recently announced a new executive order on private businesses prohibiting vaccine mandates. This order is only the newest in a series of orders dedicated to curtail the communities’ tools to fight the pandemic. The Governor has also banned mask mandates in public schools as well as vaccine mandates in public entities. Private businesses; however, are resisting.
In response, Southwest Airlines has released a statement that they will instead continue to comply with federal regulations mandating vaccines for employment. According to one spokesperson, it is their position that federal law supersedes any state order.
However, the coronavirus is not the only way in which private entities are resisting the state, with varying degrees of success. Financial institutions who hoped to do business in Texas are finding it increasingly difficult to advance their own Environmental, Social, and Corporate Governance (ESG) initiatives.
On the environmental front, the state has passed laws prohibiting state agencies from contracting with any institution that boycotts oil and gas industries. As these financial institutions have aimed to advance the fight for clean and renewable energy, the state has pushed back in its goal of saving the interests of oil and gas.
In terms of social policy, Texas has passed a similar law prohibiting state agencies from contracting with banks that cut ties with the firearms industry. In addition, these banks are required to submit written declarations proving they are in compliance with the law.
This is worrisome for financial institutions and businesses who are reluctant to continue supporting for the firearms industry, but this is also worrisome for business concerned with the presence of firearms within their premises. Texas law now permits constitutional open carry in public places for individuals without a license.
These new political developments have driven socially conscious financial investors out of the south. Even as some remain, this reduced availability limits competition for debt sales and harms lending relationship, not to mention the flight of capital outside of the state.
While it is true that financial institutions are still moving toward the state, and the state’s financial power is growing, the government is doing itself no favors. As Jen Stark of the Tara Health Foundation argues, a state’s financial incentives can be complicated when personnel do not want to be there. What most observers overlook is that financial decision makers have their own beliefs about what society and policy ought to be, and that often affects their decisions. This does not necessarily mean that financial decision makers tend to become publicly political without reservations, nor does this mean that politics are often a greater factor than profits. It does mean that financial institutions are late to recognize that effecting political in change in Texas is different than on the national stage and on Wall Street.
Whereas New York is used to political decisions following the money, Texas has a very different system. The political structure of Texas distributes power among 254 counties, each of them difficult to influence through sheer money alone. Corporations will ultimately need to make a choice. Will they attempt to push through ESG initiatives and risk losing access to resistant markets? Or will they allow the bottom line to outweigh their conscience? Corporate America has been loud about “corporate purpose” and “mission” in recent years; it remains to be seen how they handle these difficult choices.