A group of Republican senators has fired a warning shot at law firms that help businesses pursue environmental, social, and governance practices.
GOP Sens. Tom Cotton (AK), Chuck Grassley (IA), Marco Rubio (FL), Mike Lee (UT), and Marsha Blackburn (TN) sent letters to 51 law firms warning that their clients may be violating antitrust laws through the pursuit of their ESG endeavors. They also raised the specter of congressional investigations and told the firms to preserve documents for that eventuality.
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The warning is just the latest in Republican efforts at the federal and state levels to push back against Wall Street aiming to advance social and environmental goals.
“Although businesses would certainly be wise to lawyer up before undertaking ESG initiatives, your firm has a duty to fully inform clients of the risks they incur by participating in climate cartels and other ill-advised ESG schemes,” they wrote.
CRACKS FORM IN WALL STREET’S COMMITMENT TO GREEN FINANCE
“The ESG movement attempts to weaponize corporations to reshape society in ways that Americans would never endorse at the ballot box,” they continued. “Of particular concern is the collusive effort to restrict the supply of coal, oil, and gas, which is driving up energy costs across the globe and empowering America’s adversaries abroad.”
The missive, which comes less than a week before the midterm elections, further bears out that Republicans are positioned to investigate and combat ESG if they wrest control of the Senate.
The way it was written indicates that fighting corporate ESG initiatives isn’t just a fleeting political issue but one that lawmakers will pursue even if Democrats are able to maintain control of the Senate. The lawmakers hinted that the investigations and oversight could occur as soon as next year or further down the road if they don’t regain control, perhaps after the 2024 elections.
“Over the coming months and years, Congress will increasingly use its oversight powers to scrutinize the institutionalized antitrust violations being committed in the name of ESG, and refer those violations to the FTC and the Department of Justice,” the group wrote.
Republican state officials have resisted ESG over the past year or so, implementing new laws and policies to cut state ties with fund managers that have made a point to invest more in green assets and less in traditional energy. Texas Gov. Greg Abbott, for instance, signed a bill that banned state investments in businesses that cut ties with the oil and gas industry.
Several state treasurers have also been targeting specific firms that preach ESG, particularly BlackRock, which is the world’s largest money manager. GOP-led states have already divested more than $1.5 billion in funds from BlackRock in response to what they perceive as BlackRock attempting to blackball or discourage investment in fossil fuels.
“Fiduciary duty must remain the top priority for investment managers — a duty some of them have abdicated in favor of forcing a left-wing social and political agenda that has failed to succeed legislatively on publicly traded companies,” said Missouri State Treasurer Scott Fitzpatrick.
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The Securities and Exchange Commission, controlled by Biden appointees, is trying to use its rulemaking power to push for a greater emphasis on holding companies accountable for their effects on the climate. One proposal would require corporations to disclose information about their carbon emissions, and another would tighten rules governing names that suggest funds are ESG-oriented.
