By Frank Fang
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 âenvironmental, social, and governanceâ (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 they argued that ESG, at its core, was âmerely partisan politics masquerading as responsible corporate governance.â
The ESG agenda has now included âstifling investment in oil and gas,â gun control, abortion access, and âfake news dissemination,â according to the letter.
The lawmakers likened the climate action investor group to a âcartel,â whose job was to âensure the worldâs largest corporate greenhouse gas emitters take necessary action on climate change,â quoting from the groupâs website.
âWoke Corporationsâ
âWoke corporations are collectively adopting and imposing progressive policy goals that American consumers do not want or do not need. An individual companyâs use of corporate resources for progressive aims might violate fiduciary duties or other laws, harming its viability and alienating consumers,â the lawmakers wrote.
They added, âBut 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.â
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 member of the House Judiciary Committee, will be the committeeâs chairperson in the Republican-led House in January.
âCorporate Americaâs collusion in pursuit of ESG goals may violate federal or state antitrust laws,â the lawmakers added, pointing out how antitrust law is usually âskeptical of cooperation among competitors.â
âWhen 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,â they added. Ceres is a nonprofit organization and a co-founder of Climate Action 100+.
âTextbook Antitrust Violationâ
The letter cited an op-ed written by Sean Fieler, the president of New York-based investment firm Equinox Partners. The Wall Street Journal published the op-ed, titled âThe ESG Movement Is a Ripe Target for Antitrust Action,â in June.
âAdvancing the ESG agenda requires that the owners of capital collude to restrict the supply of certain goods and services. Regardless of the colluding partiesâ motivations, this is a textbook antitrust violation,â 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 Employeesâ Retirement System (CalPERS).
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 âfacilitating and coordinating companiesâ efforts to achieve ESG-related goals.â
âAll 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,â says one of the several questions listed in the letter.
The deadline for the two executives to submit the requested documents is Dec. 20. Additionally, the letter 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 BlackRockâs funds by the end of the year, over the asset managementâs push to embrace ESG investment strategies.
âThis divestment is necessary to protect Louisiana from mandates BlackRock has called for that would cripple our critical energy sector,â said Schroder, according to a statement (pdf). âESG investing violates Louisiana law on the fiduciary duties which require a sole focus on financial returns for the beneficiaries of state funds.â
On Dec. 1, Florida Chief Financial Officer (CFO) Jimmy Patronis announced that the state will begin divesting $2 billion worth of assets managed by BlackRock over the firmâs ESG policies.
âFloridaâs Treasury Division is divesting from BlackRock because they have openly stated theyâve got other goals than producing returns,â Patronis said according to a statement. âI think itâs undemocratic of major asset managers to use their power to influence societal outcomes.â