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December 12, 2022

Investor group Climate Action 100+ under attack by US Republicans over ESG

Republican members of the House Judiciary Committee have written to non-profit Ceres and public retirement plan Calpers saying their membership of Climate Action 100+ represents collusion.

Climate Action 100+, the $68tn investor engagement coalition that focuses on countering climate change, is under political attack from Republican politicians, who say it may be unlawful under US antitrust rules.

Republican members of the House Judiciary Committee have sent a letter to Boston-based NGO Ceres and the $500bn California Public Employees’ Retirement System (Calpers), who sit on ClimateAction 100+’s steering committee, alleging collusion and asking for records dating back to 2016.

It is the latest fallout in the anti-ESG wave escalating in the US last week. US-based Vanguard, the world’s second-largest asset manager after BlackRock, left the Net Zero Asset Managers initiative on Wednesday. This followed a group of Republican attorneys-general in November asking the Federal Energy Regulatory Commission not to renew Vanguard’s authorisation to buy shares in US utilities, as reported by the Financial Times. Vanguard mostly manages passive funds and the attorney-generals cited its NZAM membership as evidence that it was trying to influence corporate policy rather than being a passive investor.

Last month, the Texas senate’s committee on state affairs issued BlackRock a subpoena asking to produce documents that will help understand the potential impacts of ESG policies on the US state’s retirement savings, and requested that at least one of the fund manager’s executives is present at a hearing on December 15, as reported by Bloomberg.

Meanwhile BlackRock CEO Larry Fink was called on to resign by UK activist investor Bluebell Capital Partners over the asset manager’s “apparent hypocrisy” on ESG. BlackRock has been under pressure in the US over ESG, with the state of Florida on December 1 announcing it would divest $2bn from the firm because of its focus on sustainability factors. It follows fellow Republican-led states of Missouri and Louisiana pulling $500m and $794m, respectively, from BlackRock, over ESG.

In July, Arkansas senator Tom Cotton (pictured) wrote to BlackRock about its involvement in Climate Action 100+, saying it “appears to violate antitrust laws”.

Fink is also name-checked in the letter from Republican members to Ceres and Calpers for his annual letters to companies’ CEOs which, in recent years, have encouraged business leaders to consider ESG.

They say this is evidence of company executives, who are involved in Climate Action 100+ and Ceres, promoting “left-wing views and policies even when doing so runs counter to consumer sentiment or robs Americans of hard-earned income”.

They describe ESG as being part of “partisan politics masquerading as responsible corporate governance”, claiming that a major sustainability policy centerpiece is stifling investments in oil and gas.

Focusing on Climate Action 100+, they say it may amount to collusion which violates US federal and state antitrust laws, which is under the remit of the House Judiciary Committee, and ask for a series of documents to investigate the matter,

Climate Action 100+ sees investors work together on engaging high-carbon emitters on improving climate change governance, cutting emissions and strengthening climate-related financial disclosures.

Ceres, Climate Action 100+ and Calpers did not respond to a request for comment.

Photo credit: Mercury Bloomberg

A service from the Financial Times