State AGs Warn Financial Services Climate Group Members They May Be Violating Antitrust Laws

World leaders and delegates gather at a summit to address climate change, at the United Nations Headquarters in New York on Sept. 23, 2019. (Spencer Platt/Getty Images)

Attorneys general from 22 U.S. states sent a letter on Sept. 13 to members of the Net Zero Financial Service Providers Alliance (NZFSPA), warning them that their collective action against the fossil fuel industry may violate state and federal antitrust laws.

“We have laws that say that competitors need to compete and that when consumers suffer as a result of collusion between industry participants, that’s a problem,” Tennessee Attorney General Jonathan Skrmetti, author of the letter, told The Epoch Times.

The NZFSPA is a global alliance of accounting firms, rating agencies, stock exchanges, consultancies, and other service companies. Members pledge that they “will align all relevant services and products to achieve net zero greenhouse gas emissions by 2050 or sooner.” 

The NZFSPA is part of the UN-sponsored Glasgow Financial Alliance for Net Zero (GFANZ), which states that it is “a global coalition of leading financial institutions committed to accelerating the decarbonization of the economy.”

Other groups under the GFANZ umbrella include the Net Zero Asset Managers initiative (NZAMi), the Net Zero Banking Alliance (NZBA), the Net Zero Insurance Alliance (NZIA), and the Net Zero Asset Owners Alliance (NZAOA).

They seek to align all elements of the global financial industry with the goal of cutting the production of oil, coal, and natural gas. 

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The issue that these members are facing, however, is that it is illegal under U.S. antitrust laws, including the Sherman Antitrust Act of 1890, for companies to collude against other companies or industries.

The “consumer welfare standard” in antitrust law also considers the extent to which corporate collusion harms consumers by restricting competition or driving up prices.

According to the state AGs’ letter, “both federal and state law broadly prohibit business competitors from engaging in concerted action in restraint of trade or commerce.

“Accordingly, collective agreements to ‘restrict production, sales, or output’ are almost always illegal,” the AGs wrote. “Similarly, ‘an agreement among competitors not to do business with targeted individuals or businesses may be an illegal boycott, especially if the group of competitors working together has market power.’”

Similar letters were sent in May by 23 state AGs to 28 insurance companies that were members of the NZIA. Since the beginning of this year, half of the members of NZIA dropped out, in part over concerns about antitrust actions. 

That effort was led by the attorneys general of Louisiana, Jeff Landry, and Utah’s Sean Reyes.

“I am concerned the Net Zero Insurance Alliance is stifling competition in Louisiana and driving up insurance costs for our consumers,” Landry stated. “We are investigating if their actions violate our antitrust and consumer protection laws.”

Vanguard, one of the world’s largest asset managers, dropped out of NZAM in December 2022.

“We’ve seen some companies when they realize that what seemed like a good idea and a noble cause was actually a potential antitrust violation, they’ve withdrawn from the alliances,” Mr. Skrmetti said.

“It’s been a long time since many of these companies have faced serious antitrust inquiries, and it may be that they just weren’t thinking in terms of potential exposure.” 

“They think, ‘Hey, we’re helping the environment,’ but the way that this is structured, it’s really limiting consumer choice by moving a big part of the industry all in the exact same direction,” he said.

“Once they got a proper understanding of what they were doing, I think perhaps many of them decided it was not worth the risk.”

The AGs’ letter to members of the NZFSPA demands that they respond by Oct. 13 and, among other things, “describe in detail all communications related to your commitments to NZFSPA, including communications between you and any other NZFSPA signatories,” as well as “any communications related to your partnership with Race to Zero, including any actions you have taken to ‘halve global emissions by 2030’ or establish a ‘zero carbon world.’”

Members of the NZFSPA include Bloomberg, Deloitte, Ernst & Young, PricewaterhouseCoopers, Grant Thornton, Moody’s, KPMG, Morningstar, MSCI and Standard & Poors. They are among the world’s largest accounting firms and rating agencies.

The Epoch Times reached out to the NZFSPA for comment but has not received a response.