Committee approves substitute creating presumption against prioritizing ESG over shareholder interests

Committee Counsel explained a committee substitute to the Senate Banking and Insurance Committee on March 19, 2025 that would add definitions to chapter 31D of the West Virginia Business Corporation Act and create a prima facie presumption that a director or officer breaches a fiduciary duty if they prioritize environmental, social and governance (ESG) or other non‑pecuniary interests over pecuniary interests.

The change matters because it shifts the initial burden in a fiduciary complaint: "prima facie evidence is generally understood to mean evidence that on its face appears sufficient to prove a case," Committee Counsel told the panel, adding that a director could rebut the presumption with evidence showing the challenged action actually minimized financial risk or maximized return.

Committee discussion focused on how broadly the bill would reach. Senator Randall questioned whether the bill, as drafted, would sweep in "everything" that is not a pecuniary interest; Committee Counsel answered, "Correct," and explained that a decision later shown to reduce risk or increase return could rebut the presumption. Senator (Randolph) offered an amendment to remove the phrase "or other non pecuniary interest," narrowing the text so it would apply only when a director or officer prioritizes elements of ESG over pecuniary interests. The amendment was adopted.

After adopting the amendment, the committee agreed to the committee substitute as amended. The vice chairman moved that the committee substitute for Senate Bill 850 be reported to the full Senate with the recommendation that it do pass; after an earlier rejection and a motion to reconsider, the committee ultimately adopted the committee substitute as amended and directed it be reported to the Senate.

The committee record shows the measure will next proceed to the full Senate for consideration; no timeline for floor action was stated in the hearing. The committee did not record roll‑call vote tallies in the transcript; chairman and vice chairman called the voice votes in the hearing.

Questions from senators largely concerned scope and remedies: a senator asked whether a challenge under the bill would have to be brought as a lawsuit; Committee Counsel confirmed it would, and that the factual question of whether the fiduciary duty was breached "would be a factual question for a jury." Counsel also noted damages would be handled as in any civil case.

No outside witnesses offered testimony during the committee discussion recorded in the transcript; the lead sponsor, Senator Willis, was noted as intending to appear later at another session.

The committee minutes from the session were approved at the start of the meeting.

Next step: the committee reported the committee substitute for Senate Bill 850 to the full Senate; further action will be determined by the Senate calendar.