Antitrust And ESG: How To Stay Ahead Of The Game

• Published date: 06 June 2023
• Subject Matter: Antitrust/Competition Law, Environment, Consumer Protection, Antitrust, EU Competition , Climate Change, Dodd-Frank, Consumer Protection Act
• Law Firm: Jenner & Block
• Author: Michelle S. Kallen, Christopher Abbott, Tatjana (Tanja) Vujic and Matthew Summers

On May 15, 2023, 22 state attorneys general sent a letter to several insurance companies warning that the companies' Environmental, Social, and Governance (ESG) policies may violate antitrust laws. Just six weeks earlier, on March 30, 2023, 21 state attorneys general sent a letter to 53 investment fund managers criticizing their ESG efforts. These letters are the latest in a string of attacks on ESG efforts led by state attorneys general and federal lawmakers.

In addition to providing social and environmental benefits, ESG initiatives can create opportunities for more efficient or innovative competition and ensure compliance with regulations. Those opposing ESG efforts, however, have raised concerns under the antitrust laws about collaboration between competitors that employ similar ESG criteria or benchmarks. This alert examines these issues, identifies potential risks, and provides guidance for companies seeking to balance their ESG commitments and obligations with their antitrust obligations.

ESG has been a priority among many industry leaders for more than a decade. Lately, these efforts have come under fire from a growing anti-ESG movement. Much of that movement has focused on securities and consumer protection issues. Indeed, the March state AG letter specifically cites consumer protection and fiduciary law. These letters, however, also provide insight into where the anti-ESG movement is headed.

In particular, without expressly laying out an antitrust legal theory, the March letter suggests there are "antitrust implications" to ESG efforts, referencing "[c]oordinated efforts," "horizontal agreements," and "colluding asset managers." The May letter suggests that United-Nations-convened working groups to implement climate change goals may be an "illegal boycott" or a "collective agreement to fix prices" in violation of state and federal antitrust laws.

The anti-ESG momentum is also hastening at a federal level. A recent letter from members of the House Judiciary Committee made clear their belief that an effort by major investors to promote ESG priorities "may be unlawful under US antitrust laws." The letter raised concerns about entities it calls "woke" corporations enacting progressive values. Similarly, in a letter sent to executives of the Steering Committee for Climate Action 100+, House members described the coalition as "seem[ing] to work like a cartel to 'ensure the world's largest corporate greenhouse gas emitters take necessary action on...