Is Antitrust ESG's Achilles Heel ? House Republicans Think So.

• Published date: 21 December 2022
• Subject Matter: ntitrust/Competition Law, Antitrust, EU Competition
• Law Firm: Mintz
• Author: Mr Bruce Sokler, Jacob Hupart, Tinny T. Song and Payton Thornton

Prior to the recent midterm elections, we wrote about five Senate Republicans who issued a warning letter¹ to major U.S. law firms regarding the potential antitrust implications of Environmental, Social, and Governance ("ESG") investing and activities. The letter advises that ESG activities may be viewed as "climate cartels" and present antitrust risk when firms engage in ESG group initiatives. With the midterm election results, those Senate Republicans will likely not be able to follow through on this line of investigation. However, House Republicans have taken up the issue, and they will have the ability to conduct antitrust scrutiny of ESG initiatives.

On December 6th, Republican members of the House Judiciary Committee, including the likely incoming Chair of that Committee, Congressman Jim Jordan (R-OH), announced an investigation into whether corporations acting collectively in the name of ESG are violating the antitrust laws. Specifically, Congressman Jordan and other Republican members wrote to steering committee members of Climate Action 100+, an investor-led ESG initiative founded in 2017. The letter requests a broad range of information about Climate Action 100+ activities, including documents and communications regarding efforts to solicit member organizations to agree to advance ESG goals and other documents regarding collective efforts by the initiative.

The letter asserts that participating companies may have worked "together to punish disfavored views or industries, or to otherwise advance" ESG goals in a way that may violate the antitrust laws. The letter also cites an opinion editorial from 2019 by the then Assistant Attorney General for the DOJ Antitrust Division in the Trump Administration, Makan Delrahim, asserting that agreements between competitors as to how they should act in the marketplace regarding ESG initiatives may draw scrutiny from the federal antitrust enforcement agencies.

In addition, some state Attorneys General (invariably Republican) have also begun investigating ESG investors and policies, some of whom are focusing on antitrust issues.²

Various ESG activities can present a range of moderate to appreciable antitrust risk, and companies investing in this space should put guardrails in place to ensure that such initiatives do not run afoul of the antitrust laws and invite liability, especially in collaborations with industry-wide initiatives.

Overview of ESG Conduct Governed by the Antitrust Laws

As an initial matter, it...