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SUBJECT: Climate Control: Decarbonization Collusion in Environmental, Social, and Governance (ESG) Investing
DATE: June 12, 2024
OVERVIEW: The House Judiciary Subcommittee on the Administrative State, Regulatory Reform, and Antitrust held a hearing on whether existing civil and criminal penalties and current antitrust law enforcement efforts are sufficient to deter anticompetitive collusion to promote ESG-related goals in the investment industry.
HEARING RECORDING LINK: https://www.youtube.com/live/3pHPH6QeObY
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Witnesses
- Mindy Lubber, Chief Executive Officer and President, Ceres
- Dan Bienvenue, Interim Chief Investment Officer, CalPERS
- Natasha Lamb, Managing Partner and Chief Investment Officer, Arjuna Capital
- Keith Ellison, Attorney General, State of Minnesota
Key Themes & Highlights
- Republican Concerns:
- "Climate Cartel": Republicans, led by Chairman Massie, accused the so-called "Climate Cartel" of forcing companies to decarbonize and invest in renewables, arguing this collusion violates antitrust laws and undermines competition in key industries such as agriculture, aviation, and automobiles.
- Economic Impact: They raised concerns about the economic implications of ESG investing, including potential price increases and negative impacts on energy availability and reliability.
- Antitrust Violations: Several Republicans, including Mr. Jordan and Ms. Hageman, argued that collaboration among companies to push green agendas constitutes antitrust violations and restricts market freedom.
- Democratic Concerns:
- Shareholder Rights: Democrats, represented by Mr. Correa and others, defended the rights of shareholders to influence corporate policies, emphasizing that sustainable practices reduce financial risks and protect long-term investments.
- Climate Risk Management: Witnesses like Ms. Lubber and Mr. Bienvenue highlighted the financial and operational risks posed by climate change, arguing that addressing these risks through ESG practices is essential for investor protection and economic stability.
- No Antitrust Violations: Democrats and witnesses, including the Minnesota Attorney General Mr. Keith Ellison, argued that collaboration on climate initiatives does not constitute collusion or antitrust violations, asserting that it is essential for addressing systemic financial risks posed by climate change.
- Witness Testimonies:
- Mindy Lubber (Ceres): Emphasized the financial risks of climate change and the necessity for businesses to act in their interests by reducing emissions and adapting to climate impacts.
- Dan Bienvenue (CalPERS): Defended collaboration as necessary for managing long-term investment risks, highlighting CalPERS' commitment to sustainable investing and the benefits of a low-carbon economy.
- Natasha Lamb (Arjuna Capital): Discussed the importance of considering environmental risks in investment decisions, noting that her firm's actions are driven by capitalist principles and aimed at long-term financial returns.
- Contentious Points:
- Republicans: Focused on potential overreach of ESG initiatives, economic drawbacks, and perceived regulatory burdens.
- Democrats: Emphasized the importance of managing climate risks, protecting shareholder rights, and the legitimacy of collaborative efforts to promote sustainability.
- Key Discussions:
- Impact of Climate Change: Both sides acknowledged the significant financial and operational risks posed by climate change, but differed on how to address these risks.
- Antitrust Concerns: Republicans argued that ESG initiatives might violate antitrust laws, while Democrats and witnesses countered that such collaborations are lawful and necessary for addressing climate risks.
- Economic Implications: Discussions included the economic impact of ESG initiatives, with Republicans concerned about costs and reliability, while Democrats emphasized long-term financial stability and risk mitigation.
In-Depth Notes
- Mr. Massie (chairman) talked about the “Climate Cartel” trying to push their own agendas on the American people. Talked about the leftists trying to force companies to decarbonize and force companies to make investments into renewables forcing these companies to act against their own self-interest. Talked about how climate cartels use their capital to push companies to meet their demands by also replacing directors of boards to push their own agenda. This collusion is violating anti-trust laws and removing competition in key industries like agriculture, aviation, and automobiles.
- Mr. Correa talked about how viewing this as breaking trusts this is harming stockholders. Stockholders have a right to push companies in the way they want, and companies should be responsible to their stockholders and their demands no matter if they are green or not. Stockholders are focused on risk and companies that are decarbonizing have less risk and should be allowed to push companies to have less risk and protect their investments. Climate change costs 93 billion to the US economy in 2023 and it was the hottest year ever. Companies have a fiduciary duty to protect their investors and managing for a low carbon future is good for investments. Shareholders should have the right to influence companies whose stock they own this is the basis of capitalism. Talked about how the hearing is ridiculous and violating the rights of shareholders. There is no violation in anti-trust. No evidence of collusion or price fixing. OPEC cartel is the reason not sustainable energy. We should invest in sustainable energy to increase competition, improves consumer choices and enhances our national defense.
- Mr. Jordan talked about trying to restrict the production of a product violates anti-trust laws and just because they are trying to save the planet doesn’t prevent them from violating anti-trust laws. Talked about how all of the Climate Action’s plans are crazy and are going to raise prices.
- Ms. Lubber Series talked about how problems generated from climate change can harm investors and companies. Saying people are acting on climate because of the business’s interests. Brought up impacts of weather cost 93 billion, companies have infrastructure being at risk due to climate change, droughts can harm agriculture. Climate Action 100+ engage with reducing risk for high emission companies. Series helps engage information and tools to benchmark projects to meet targets to reduce emissions.
- Ms. Lamb Arjuna capital manages 500 million in investments. Take material environmental risks into account when investing 1.7 trillion-dollar industry their company is not able to affect any big change. They are capitalist and function that way.
- Big themes every witness volunteered to come to the hearing and are also capitalist companies.
- Mr. Bienvenue CalPERS manages pensions for California’s public retirement system. This is not collusion its collaboration only looking 500 billion dollars in assets 200 million public employees managed. Most of it comes from investment returns and must look long term to provide benefits to fiduciaries. Good cooperate convergence is good for shareholder value. Climate change poses a severe threat and must minimize this risk by pushing companies to go greener. Must invest in the future 100 billion dollars to invest in a low carbon economy invest in brown to green investments. Primary fiduciary duty means must look long term for climate change risk.
- Minnesota Attorney general Mr. Keith Ellison collusion is not enough to violate anti-trust laws proven by the courts. None of these companies are in violation of anti-trust laws and companies are allowed to collaborate to influence public policy and nothing in the anti-trust law prevents companies from accounting for climate change out of the 100 biggest companies 96 report risks climate reports and climate change. Have produced no collusions in the hearing.
- Ms. Hageman said its collusion between these organizations is evil and they are raising prices, and the reason America is so powerful is due to cheap energy. Saying how leftist ideas are killing people due to energy outages.
- Mr. Gaetz questioned whether there was any study showing a benefit in investing in green technology. Brought up DEI hires in CalPERS saying the boards being made are poor because CalPERS is voting diverse people into company boards saying its racist. Also, these DEI hires aren’t preforming as well.
- Mr. Nadler brought up how Republicans are abusing these witnesses. Saying no collusion or price fixing is happening between these organizations. Saying Republicans are using the power of this committee to scare companies against green action.
- Mr. Bishop brought up how Climate Action 100+ members having to sign to join saying they care about climate change is collusion. Was countered by saying it was about financial risks.
- Ms. Jayapal brought up how there are large levels of collusions in the oil industry and other big industries and said that Republicans are using these powers to have a proxy fight against climate change and engage in a culture war. Said that insurance companies are having to adjust to climate problems so should businesses. Brought up how there are financial risks that affect pensions and are not in the wrong for wanting to account for climate change.
- Mr. Fitzgerald questioned Ms. Lubber on the collaboration in Climate Action 100+ giving information to investors and companies Ms. Lubber said there wasn’t collaboration between these companies that violated anti-trust laws.
- Mr. Swalwell brought up how Republicans are now trying to overly regulate both business and personal life. Brought up how these witnesses are making money and can be fired if they don’t make money. Also brought up how the anti-climate teacher pensions in Texas make less money than CalPERS. Made fun of Republicans saying none of these companies can make up a “Climate Cartel.”
- Mr. Van Drew asked questions to Mr. Bienvenue asking whether he would choose altering companies that are more versus less green focused. Brought up how these companies are harming investors because these people are trying to change America instead of focusing on investors.
- Mr. Johnson brought up how MAGA republicans are putting profits over people and Republicans are being funded by dark money groups to pressure smart investors against investing in more green companies. Questioned Ms. Lubber where she brought up how it makes no sense for these green investment companies don’t want these companies to fail because they are invested in these companies. Brought up how these companies are being asked to transition to be greener for climate problems in the future. Brought up how OPEC is an actual cartel and the witnesses have almost no influence compared to OPEC.
- Mr. Massie brought up how there is coordination between these companies because they are giving suggestions to companies like airline companies to cap the number of flights and raising prices for flights which is more anti-trust laws.
- Ms. Balint brought up how this hearing is ridiculous and is a waste of time because these green investment companies are not violating anti-trust laws and there are no binding agreements between companies meaning there is no violation of anti-trust laws.
- Mr. Cline brought up how some information was not given in the subpoena and will hold people in contempt of court.
- Mr. Ivey brought up how 90,000 documents is a lot for a private company and how the subpoena could go to court as abusive and to seek contempt of court is an abuse of power. brought up how houses are sometimes not able to be insured due to climate change impacts.
- Mr. Jordan again resaid that a lot of big companies are leaving Climate Action 100+. Ms. Lubber said it was due to Congressional pressure to leave.
- Mr. Issa brought up how oil and gas is still essential to everyday life and the “Climate Cartel” is encouraging people to not invest in these critical industries. Also invest in 3rd party litigation because its profitable. Says these companies are focusing more on their politics instead of profits.
- Ms. Spartz again brought up collaboration saying company owners transforming the markets to be greener is collusion not collaboration.