A U.S. House of Representatives committee report finds that Wall Street colluded to cut emissions

Author: Isla Binnie

(Reuters) – The Republican majority on a U.S. congressional committee released a report on Tuesday accusing Wall Street firms of colluding with advocacy groups to force companies to cut greenhouse gas emissions.

The commission’s report, previously reported by Reuters, is the first since it launched an investigation in 2022 into whether companies’ efforts to combat climate change violate antitrust laws.

Several Republican-controlled states are attacking Wall Street firms for joining climate coalitions and marketing investment products focused on environmental, social and governance (ESG), 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 report, Republican lawmakers accuse President Joe Biden’s administration of “failing to conduct a meaningful investigation into the climate cartel’s collusion, let alone take enforcement action over its apparent violations of long-standing U.S. antitrust law.”

A White House spokesman did not immediately respond to a request for comment. Congressman Jerrold Nadler, a Democrat on the House Judiciary Committee that prepared the report, rejected its findings in a document seen by Reuters.

“There is no antitrust theory that prevents private investors from working together to address climate change risks,” Nadler wrote in the introduction to a document prepared by Democrats in response.

While anti-ESG legislation is unlikely as long as Democrats control the White House and Senate, any recommendations made by the commission could shed light on what the new administration led by Republican Donald Trump could try to implement if it wins the November US elections.

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

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 commission’s report said it had presented interim findings and that its investigation was continuing. Democrats argued in their rebuttal that coordinating climate efforts promotes competition by creating a common emissions disclosure framework that allows asset managers to operate with lower compliance costs and their clients can better compare their performance.

The Commission issued subpoenas for documents and conducted interviews with former regulators. Republicans focused the committee report on Climate Action 100+, a group of more than 700 investors focused on getting businesses to reduce emissions. They credited their investigation with several asset managers ending their memberships this year for fear of antitrust crackdowns.

The committee’s report said Climate Action 100+ “forces asset managers to join in” and urges them to use shareholder votes to support climate proposals, seeking to limit 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

Republicans also targeted 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 to prohibit investors from considering climate-related financial risks.

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

Arjuna did not immediately respond to a request for comment.

The committee’s report cited work plans, meeting minutes and other documents obtained by the committee, including an internal email relating to the 100+ Climate Action Plan aimed at replacing board members of oil and gas company Exxon Mobil, which stated that these efforts “will show (Climate Action 100+) has teeth.”

Republicans have designated three of the world’s largest asset managers, BlackRock, Vanguard and State Street, as members of the climate cartel.

Representatives for BlackRock and State Street had no immediate comment. A Vanguard spokesman said the firm’s “mission is to help individual investors achieve their financial goals” and remains committed to cooperating with the commission’s requests.

(Reporting by Isla Binnie in New York; Editing by William Maclean and Stephen Coates)