Antitrust – a previously dormant area of law and federal enforcement – has reached a new zenith in recent years. While progressives aim to reinvigorate the anti-monopoly origins of antitrust, some Republicans are weaponizing antitrust in service of their narrative and legislative anti-ESG campaigns.
Financial institution coalitions focused on responding to the market effects of climate change have been a particular target. From the outset, the notion that financial institutions are “boycotting” the fossil fuel industry – despite the fact that many targeted banks are leading financiers of fossil fuels – has animated Republican politicians advocating for anti-ESG legislation.
As these allegations of antitrust violations have risen to the fore, Republican Attorneys General have also taken aim at asset managers’ responses to ESG-related shareholder proposals.
It is important, amidst the flurry of investigative letters, legislative campaigns, and bombastic op-eds, to disentangle three conversations happening at the intersection of antitrust and ESG:
- Actions involving Financial Institutions – net-zero, climate, or ESG alliances and coalitions among financial firms, which involve purported “boycott” issues relating to disinvestment in fossil fuel industries.
- Republican state-level anti-ESG bills, many of which use “boycott” language, although key debates often center on fiduciary duties rather than antitrust principles.
- Other non-financial industry competitor collaborations – involving joint standard setting, joint ventures, information sharing, or various industry-wide collaborations, which may invoke competition concerns beyond boycotts, such as price fixing, output restrictions, or unfair methods of competition.
Most of the rhetoric and activity has occurred in the first two categories in the US, so we focus there, in an effort to differentiate political narratives from legal reality.
