House Republicans Warn ESG Policies May Violate Antitrust Laws

Six Republicans on the House Judiciary Committee have launched an investigation looking into whether major climate groups are violating federal antitrust laws in their effort to push the “environmental, social, and governance” (ESG) agenda.

Their concerns were raised in a letter dated Dec. 6 to two executives on the steering committee for investor group Climate Action 100+ in which the Republicans argued that ESG, at its core, was “merely partisan politics masquerading as responsible corporate governance.”

The ESG agenda has now included “stifling investment in oil and gas,” gun control, abortion access, and “fake news dissemination,” according to the letter.

The lawmakers likened the climate action investor group to a “cartel,” whose job is to “ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change,” quoting from the group’s website.

‘Woke Corporations’

“Woke corporations are collectively adopting and imposing progressive policy goals that American consumers do not want or do not need. An individual company’s use of corporate resources for progressive aims might violate fiduciary duties or other laws, harming its viability and alienating consumers,” the lawmakers wrote.

“But when companies agree to work together to punish disfavored views or industries, or to otherwise advance environmental, social, and governance (ESG) goals, this coordinated behavior may violate the antitrust laws and harm American consumers.”

The letter was signed by Reps. Jim Jordan (R-Ohio), Dan Bishop (R-N.C.), Matt Gaetz (R-Fla.), Tom McClintock (R-Calif.), Scott Fitzgerald (R-Wis.), and Cliff Bentz (R-Ore.). Jordan, currently the ranking Republican member of the House Judiciary Committee, will be the committee’s chairperson in the Republican-led House in January.

“Corporate America’s collusion in pursuit of ESG goals may violate federal or state antitrust laws,” the lawmakers wrote, pointing out how antitrust law is usually “skeptical of cooperation among competitors.”

“When enterprises like Climate Action 100+ or Ceres invite or facilitate collusion to achieve progressive policy goals, that activity can aid anticompetitive and unlawful agreements and behavior.”

Ceres is a nonprofit organization and a co-founder of Climate Action 100+.

‘Textbook Antitrust Violation’

The letter cited an op-ed written by Sean Fieler, president of New York-based investment firm Equinox Partners. The Wall Street Journal published the op-ed, “The ESG Movement Is a Ripe Target for Antitrust Action,” in June.

“Advancing the ESG agenda requires that the owners of capital collude to restrict the supply of certain goods and services. Regardless of the colluding parties’ motivations, this is a textbook antitrust violation,” Fieler wrote.

The letter was addressed to Mindy Lubber, CEO of Ceres, and Simiso Nzima, managing investment director of global equity at the California Public Employees’ Retirement System.

The Republicans want the two executives to turn over all documents from Dec. 1, 2016, to the present showing how the organization has played its role in “facilitating and coordinating companies’ efforts to achieve ESG-related goals.”

“All documents and communications referring or relating to any efforts by Climate Action 100+ … or Ceres to obtain or solicit agreements, commitments, or other types of participation from any investors, members, or other companies, including but not limited to BlackRock, State Street, or Vanguard, to advance ESG-related goals,” one of the several questions listed in the letter reads.

The deadline for the two executives to submit the requested documents is Dec. 20. The letter also asks that further records and materials on this topic must be preserved.

Divestment

Recently, some states have decided to divest funds from BlackRock over its ESG investment policies.

For example, in October, Louisiana state Treasurer John M. Schroder announced that the Pelican State will divest $794 million out of BlackRock’s funds by the end of the year over the asset management’s push to embrace ESG investment strategies.

“This divestment is necessary to protect Louisiana from mandates BlackRock has called for that would cripple our critical energy sector,” Schroder said, according to a statement (pdf). “ESG investing violates Louisiana law on the fiduciary duties which require a sole focus on financial returns for the beneficiaries of state funds.”

On Dec. 1, Florida Chief Financial Officer Jimmy Patronis announced that the state will begin divesting $2 billion worth of assets managed by BlackRock over the firm’s ESG policies.

“Florida’s Treasury Division is divesting from BlackRock because they have openly stated they’ve got other goals than producing returns,” Patronis said according to a statement. “I think it’s undemocratic of major asset managers to use their power to influence societal outcomes.”

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Frank Fang is a Taiwan-based journalist. He covers US, China, and Taiwan news. He holds a master’s degree in materials science from Tsinghua University in Taiwan.

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