Last year, we wrote about the potential antitrust liability companies might face from participating in organizations seeking to advance environmental, social and governance (known as ESG) goals. That trend continued throughout 2023 and 2024, as congressional leaders investigated coalitions they believed engaged in improper activities, subpoenaed executives of ESG-embracing organizations for depositions and released committee reports discussing their findings on these issues.1 The recent developments do not alter the conclusion from our previous post that "[t]hose looking to advance ESG initiatives through cooperation should be extremely wary of antitrust enforcement."
In light of this continued threat, some have suggested that regulators should allow an exemption to antitrust laws providing companies an opportunity to collaborate on ESG issues. However, antitrust regulators do not appear interested in the idea. Speaking at the Spring Meeting of the American Bar Association, FTC Chair Lina Khan stressed there is no ESG exemption to the antitrust laws. She also noted that it should be Congress that creates an exemption, rather than the FTC. Kahn's statement was consistent with her remarks in 2023 that anticompetitive conduct cannot be "cured through some promise or commitment to various types of ESG values."
Synda Mark, the deputy assistant director for the FTC's Office of Policy and Coordination, echoed Khan's comments. While Mark noted the potential benefits of ESG initiatives, she stressed that antitrust enforcers' mandate is to focus on harms to competition. Mark warned companies that the FTC would not "turn a blind eye" to anticompetitive conduct simply because of the conduct's environmental benefits.
The DOJ's antitrust enforcers also struck a similar tone. Speaking at the same Spring Meeting, Jonathan Kanter indicated an exemption was not coming, instead referring companies to antitrust laws already on the books and the cases interpreting those laws. He implored companies to work with attorneys to figure out how to advance ESG initiatives while not running afoul of antitrust laws.
In short, companies looking to work together on ESG initiatives should not expect an exemption from antitrust laws anytime soon. However, the alternatives noted in our previous post remain options for companies seeking to advance ESG initiatives. Companies can work together to lobby the government to enact ESG-friendly legislation (already protected by its own exemption under the Noerr-Pennington doctrine) or discuss potential best practices and nonbinding codes of conduct and certification standards (as long as confidential information is not shared). And of course, companies can act unilaterally to advance ESG goals if they do not have monopoly power over their respective market. These unilateral actions could include refusing to deal with vendors that do not adopt ESG standards or providing incentives for vendors to adopt them.
Of course, with a federal election coming in less than a month, companies would be prudent to monitor changes in policy from whichever administration takes office in 2025.
Footnote
1 Interim Staff Report of the Committee on the Judiciary of the U.S. House of Representatives, Climate Control: Exposing the Decarbonization Collusion in Environmental, Social, and Governance (ESG) Investing (June 11, 2024).
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