GOP Senators Warn Law Firms Against Their Clients Creating Climate Cartel ESG Deals

By Mark Tapscott
Mark Tapscott
Mark Tapscott
Congressional Correspondent
Mark Tapscott is an award-winning investigative editor and reporter who covers Congress, national politics, and policy for The Epoch Times. Mark was admitted to the National Freedom of Information Act (FOIA) Hall of Fame in 2006 and he was named Journalist of the Year by CPAC in 2008. He was a consulting editor on the Colorado Springs Gazette’s Pulitzer Prize-winning series “Other Than Honorable” in 2014.
November 10, 2022Updated: November 13, 2022

Sen. Marsha Blackburn (R-Tenn.) and Sen. Tom Cotton (R-Ark.) are telling 51 of the nation’s top law firms that they should warn their clients to “lawyer up” if they enter environment, social and governance (ESG) agreements that create “climate cartels.”

In a blunt Nov. 3 letter to the firms that was made public on Nov. 9, Blackburn and Cotton wrote that “the ESG movement attempts to weaponize corporations to reshape society in ways that Americans would never endorse at the ballot box.”

“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 letter reads.

Epoch Times Photo
Sen. Marsha Blackburn (R-Tenn.) speaks during a Senate Judiciary Committee business meeting to vote on Supreme Court nominee Judge Ketanji Brown Jackson in Washington, on April 4, 2022. (Anna Moneymaker/Getty Images).

The ESG movement encourages large public investors such as Fortune 500 corporate and governmental pension programs to pull investments in corporations and public institutions that resist adopting a wide range of progressive environmental, social, and governance policies in place of maximizing the profitability and efficiency that drives product innovation, job growth, and market expansion.

Joining Blackburn and Cotton in signing the letter were Sens. Mike Lee (R-Utah), Marco Rubio (R-Fla.), and Charles Grassley (R-Iowa). Lee, Rubio, and Grassley were reelected in the Nov. 8 midterm election.

“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 Federal Trade Commission (FTC) and the Department of Justice (DOJ),” the letter reads.

“To the extent that your firm continues to advise clients regarding participation in ESG initiatives, both you and those clients should take care to preserve relevant documents in anticipation of those investigations.”

The request to preserve documents is typically made prior to the official beginning of a congressional investigation. Blackburn, Cotton, and Lee are members of the Senate Judiciary Committee, while Grassley is the panel’s ranking minority member and would likely become chairman if Republicans succeed in regaining control of the Senate.

A Senate probe of ESG programs for possible antitrust violations would also clash with President Joe Biden’s determination to include the approach in federal funding decisions.

In October, the Biden administration awarded more than $2.8 billion to 20 companies that agreed to adopt ESG considerations in hiring employees for work in the production of batteries for electric vehicles (EVs).

Sen. Marco Rubio
Sen. Marco Rubio (R-Fla.) speaks during a Senate Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies hearing in Washington on May 17, 2022. (Anna Rose Layden/Pool/Getty Images)

In their letter, the senators reminded the law firms that “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.”

The senators also pointed out that during a recent Senate hearing, FTC Commissioner Lina Khan and Assistant Attorney General Jonathan Kanter of the DOJ’s antitrust division were asked to share their thoughts about ESG collusion.

They said Khan emphasized that there was no ESG exemption to antitrust laws and regarding ESG group initiatives, she noted that those types of cooperation or agreements—in as much as they can affect competition—were “always relevant to” the FTC.

The senators said Kanter emphasized his own agreement with “the sentiment that collusion is anti-competitive,” and he agreed that when firms had substantial power and used that power to achieve anti-competitive ends, that should be “actionable under the antitrust laws.”

The popularity of ESG investment strategies has grown in recent years, but criticism of them has also increased as more data becomes available on how they perform.

The Harvard Business Review (HBR), for example, noted in an Aug. 1 analysis that “ESG funds typically charge fees 40 percent higher than traditional funds making them a timely answer to asset management margin compression.”

“All too often these higher fees are unwarranted given that ESG funds often closely mirror ‘vanilla’ funds,” the analysis reads.

The HBR analysis further pointed out that “confusion about ESG has also led to criticism within the investment community.”

It continued, quoting hedge fund manager Sir Chris Hohn saying, “ESG for most managers is total greenwash and investors need to wake up to realize that their asset managers talk but don’t actually do.”

In addition, HBR stated, “Earlier this year, Morningstar, an investment research and advisory firm, removed the ESG tag from more than 1,200 ESG funds managing over $1 trillion in assets because the funds did not ‘integrate [ESG factors] in a determinative way in their investment selection.’”