Dive Brief:
- The House Judiciary Committee issued subpoenas to asset managers Vanguard and Arjuna Capital Monday, alleging the firms failed to fully reply to earlier document requests related to their efforts to advance ESG policies. Both firms have provided the committee with over 1,000 documents to date, according to their subpoenas.
- In the subpoenas, Committee Chair Jim Jordan, an Ohio Republican, said the companies’ responses have been inadequate unless compelled. A spokesperson for Arjuna Capital told ESG Dive, “We have responded to and intend to fully comply with the House Judiciary committee's request.”
- The committee’s subpoenas represent the latest measure in its yearlong investigation into whether industry groups with decarbonization or net-zero emissions goals are collusive in nature and violate U.S. antitrust laws by “choking off investment” in the fossil fuel industry, Jordan alleged in his initial outreach to the firms.
Dive Insight:
One of the committee’s focuses this past year has been whether climate alliances of major industry players could potentially hold enough sway in a market to push their coalitions’ preferred policies. If that premise is true, Jordan believes such groups and their agreements would run afoul of the Sherman Act, an anti-monopoly law that outlaws unreasonable “contract, combination, or conspiracy in restraint of trade.”
The committee first contacted Vanguard on July 6 and Arjuna Capital on August 1, requesting the two firms produce any documents related to their involvement with the United Nations-backed Net Zero Asset Managers initiative and their decarbonization policies.
“Corporations are collectively adopting and imposing progressive environmental, social, and governance (ESG)-related goals, and [the two firms appear] to have entered into collusive agreements to ‘decarbonize’ its assets under management and reduce emissions to net zero in ways that may violate U.S. antitrust law,” Jordan wrote in the subpoenas’ cover letters.
The committee said it reached out to Vanguard in July because of the firm’s prominence as the world’s second-largest asset manager and a member of NZAM from 2021 until Vanguard announced last week it withdrew from the alliance. Vanguard said its association with NZAM has led to “confusion about the views of individual investment firms” and the choice will not affect its commitment to helping investors “navigate the risks that climate change can pose to their long-term returns.”
Vanguard has given the committee 3,619 documents since the original request, according to the subpoena. However, the committee believes Vanguard’s size as a company suggests it should possess more material pertinent to the request.
Vanguard did not respond to a request for comment in time for publication.
Arjuna Capital was targeted for its approach to investing, which calls economic vitality, environmental responsibility and social justice “all bottom line concerns” and views investment opportunities through an ESG lens, according to the August letter. Arjuna Capital’s strategy includes divesting from tobacco, weapons and fossil fuel companies, and the firm is also a member of both NZAM and Climate Action 100+.
Jordan said Arjuna Capital had produced among the “very lowest” amount of documents of any asset manager queried by the committee. The subpoena to Arjuna Capital said the company has produced 1,934 documents and previously said in September it had completed its response to the document request.
The House Judiciary committee has previously issued subpoenas to other members of the NZAM initiative and similar UN-backed industry alliances for net zero. Last month, the committee subpoenaed the Glasgow Financial Alliance for Net Zero and shareholder advocacy nonprofit As You Sow, under the same allegations of potential antitrust violations.
