An exclusive US House of Representatives committee report finds Wall Street ‘colluding’ to cut emissions

Author: Isla Binnie

(Reuters) – In a report seen by Reuters ahead of publication, a U.S. congressional committee will on Tuesday accuse major Wall Street firms of colluding with advocacy groups aimed at forcing companies to cut greenhouse gas emissions.

The report is the first of its kind from the Republican-led House Judiciary Committee since it launched an investigation in late 2022 into whether corporate efforts to combat climate change violate antitrust laws.

Several Republican-controlled states are already targeting Wall Street firms for joining climate coalitions and marketing environmental, social and governance (ESG)-focused investment products, fearing that these initiatives will hurt jobs in the fossil fuel industry.

This is despite the world failing to honor the intergovernmental agreement reached in Paris in 2015 to keep global warming at 1.5 degrees Celsius (2.7 degrees Fahrenheit) to avoid the most catastrophic effects of climate change.

In the Judiciary Committee’s report, committee staff accuses President Joe Biden’s administration of “failing to conduct a meaningful investigation into the climate cartel’s collusion, let alone take enforcement action on its apparent violations of long-standing U.S. antitrust law.”

A White House spokesman did not immediately respond to a request for comment.

“The goal of any investigation is to obtain information about legislative reforms,” said a spokesman for Judiciary Committee Chairman Jim Jordan.

While the legislation is unlikely to be introduced as long as Democrats control the White House and Senate, any bill proposed by the committee could contain hints of what the new administration, led by Republican Donald Trump, could try to implement if it wins the US elections in November.

No antitrust lawsuit has been filed against any climate coalition of companies. A Jordan spokesman declined to comment on any contacts with U.S. antitrust regulators regarding the report. The U.S. Department of Justice and the Federal Trade Commission, which oversee antitrust reviews, did not immediately respond to requests for comment.

The report said interim findings were presented and that the investigation was continuing.

During the investigation, the committee issued subpoenas for documents and interviewed former regulators. His report on Tuesday focused on Climate Action 100+, a group of more than 700 investors focused on urging companies to cut emissions, and credited the investigation with several asset managers ending their membership this year out of fear of antitrust crackdowns.

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The report said Climate Action 100+ “forces asset managers to join in” and pressures them to use shareholder votes to support climate proposals, seeking to reduce fossil fuel extraction and raise energy prices for American consumers.

A spokesman for Climate Action 100+ said its goals of ensuring investors manage climate change have been misunderstood in political discourse and that investors are “independent fiduciaries, responsible for their individual investment and voting decisions.”

“As the world’s largest investor engagement initiative, Climate Action 100+ will be closely scrutinized… However, any review must be fair, thorough and fact-based,” the spokesman said.

KALPERS, CERESES

The committee’s report also targets the co-founders of Climate Action 100+, the California Public Employees Retirement System (CalPERS) and the climate-focused investor group Ceres for their key support of Climate Action 100+. He says member activist investor Arjuna Capital is “seeking to destroy fossil fuel companies.”

The commission summoned witnesses, including Ceres President Mindy Lubber, to appear at a public hearing on June 12.

Ceres said in a statement that the hearing is part of a “larger political campaign by climate opponents” who want to “prohibit investors from considering climate-related financial risks in their decision-making.”

A CalPERS spokesman said it is “proud to participate” in initiatives like Climate Action 100+. “This is not collusion, it is cooperation,” the spokesman said.

Arjuna did not immediately respond to requests for comment.

The report cited work plans, meeting minutes and other documents obtained, including an email between Ceres executives comparing their work to Climate Action 100+’s work with a “global navy” and “army land troops.”

Another internal email referenced Climate Action 100+’s plan to replace board members of oil and gas company Exxon Mobil and said the effort “will show that (Climate Action 100+) has teeth.”

The report also criticized three of the world’s largest asset managers, BlackRock, Vanguard and State Street, as members of a “climate cartel.”

Representatives for BlackRock, State Street and Vanguard had no immediate comment.

(Reporting by Isla Binnie in New York Editing by Nick Zieminski)