Dive Brief:
- House Judiciary Committee Chair Jim Jordan (R-Ohio) issued subpoenas alleging potential antitrust violations to shareholder advocacy nonprofit As You Sow and the UN-backed Glasgow Financial Alliance for Net Zero on Wednesday, after the pair allegedly failed to respond, or sufficiently respond, to requests for documents.
- The subpoenas claim GFANZ and As You Sow are facilitating collusion through their engagement in large climate alliances that “promote and adopt left-wing … ESG goals.” As You Sow CEO Andrew Behar told ESG Dive “the fundamental assumptions that the committee's working on are incorrect.”
- Jordan’s subpoenas say the committee is looking into potential legislative reforms to existing antitrust laws and penalties. Similar judiciary subpoenas have gone out in recent months to shareholder advocacy nonprofit Ceres and investor initiative Climate Action 100+, As You Sow is a signatory of the latter.
Dive Insight:
The committee first contacted GFANZ and As You Sow in July and August, respectively, by requesting documents from both organizations about how they advance ESG policies. Jordan’s subpoenas this week said the committee is looking to “inform potential legislation related to collusive ESG policies.”
GFANZ was first contacted by the committee at the beginning of July and sent 72 documents in August and 723 at the beginning of September in response. Jordan’s subpoena, however, said the second trove of documents contained “excessive redactions” and excluded documents from before 2022, which the group told the committee was due to a different governance structure and email system they had before.
The alliance told the committee it does not have a “clear legal right” to share pre-2022 documents, according to its subpoena. Jordan takes issue with the fact that GFANZ has acknowledged that there’s a difference between having the legal rights to share those communications and having them available. He said the group has not sought legal rights to share those documents since the committee’s first contact and reiterated a request for communications dating back to 2020.
The committee first contacted As You Sow on Aug. 1, asking for documents on how it advances decarbonization goals through “direct engagement, sponsoring, supporting, opposing, or voting for directors and stockholder proposals.” Behar said the company responded saying it doesn’t believe the antitrust allegations have any bearing on them, as a nonprofit organization — a claim the judiciary committee said the Supreme Court has “regularly refused.” Jordan responded with the subpoena based on the same assumption As You Sow potentially violated the Sherman Act, an anti-monopoly law that outlaws unreasonable “contact[s], combination[s] or conspirac[ies] in restraint of trade.”
“Corporations are collectively adopting and imposing left-wing environmental, social, and governance (ESG)-related goals, and the Committee is concerned,” the Ohio lawmaker wrote to the company. “To advance our oversight and inform potential legislation related to collusive ESG policies, the Committee must understand how and to what extent As You Sow may facilitate collusion to promote ESG-related goals.”
“The subpoena is fundamentally flawed,” Behar said in an interview. “The demands are inapplicable to As You Sow, and the requests are so broad as to be unbounded and that antitrust allegation is just twisting the facts in the law.”
As a shareholder of a company, As You Sow advises business leaders on how to improve their performance on issues of material environmental and social financial risks. Behar said most companies then accept the nonprofit’s proposals, but others may be elevated to a nonbinding shareholder vote. Behar called the subpoena a “misguided attack” that’s “aimed at the investment community and trying to silence shareholder voices.”
“If there's a material risk that a shareholder identified, they have a right to ask the company about it,” he said. “What the House Judiciary Committee’s saying is that they don't think shareholders have that right. And we think that's a fundamental part of, well, democracy and capitalism and good governance. “
Jordan’s subpoena alleges the requests are lawful because the committee is considering antitrust reforms, and “Congress has a ‘broad and indispensable’ power ‘to secure needed information in order to legislate.’” Those powers expressly include “inquiries into the administration of existing laws [and] studies of proposed laws … for the purpose of enabling the Congress to remedy them,” which Jordan says is the case here.
Danielle Fugere, As You Sow’s president and chief counsel, said in a release Wednesday that while the company is “deeply disappointed in the House Judiciary Committee’s decision to issue this subpoena as part of a broader anti-climate investigation,” it will work with the committee to answer “reasonable questions.” Behar said the company has not been in contact with any of the other subpoenaed organizations.
