Stewardship | November 2, 2023

With subpoenas, Rep. Jim Jordan seeks to chill shareholder action on climate

David Bank
ImpactAlpha Editor

David Bank

ImpactAlpha, Nov. 2 – The GOP majority on the House Judiciary Committee escalated its legal showdown with shareholder activists and industry initiatives that are urging companies to monitor and mitigate their climate risks.

Subpoenas demanding documents and communications went to the nonprofit shareholder advocacy organization As You Sow and the Glasgow Financial Alliance for Net Zero, or GFANZ.

“Corporations are collectively adopting and imposing left-wing environmental, social, and governance (ESG)-related goals,” the chairman of the committee, Rep. Jim Jordan, wrote, expressing concerns “that As You Sow appears to facilitate collusion that may violate U.S. antitrust law.”

In a sign of the times, the activist group Ceres, on a webinar this week, posted a disclaimer that it “does not require or seek collective decision-making or action” and facilitates only the exchange of public information.

“This is a serious issue, but based on the growing body of legal analysis, we don’t think investors should abandon their commitments,” says John Cochrane of the US Impact Investing Alliance.

Shareholder voice

The committee appears to be targeting Climate Action 100+, an investor effort to press large corporate greenhouse gas emitters to adopt transition plans and enhance disclosure. As chairman of the committee, Jordan wrote that As You Sow “has entered into apparently collusive agreements with Climate Action 100+ and other ESG cartels.”

As You Sow’s Andrew Behar called the committee’s action’s anti-business and an attack on shareholders’ rights.

“We own the company. The board reports to us,” Behar told ImpactAlpha. “We can’t have a conversation with them and identify risks? The committee is jumping into private-sector business decisions.”

Climate reaction

The committee this summer also sent letters to Institutional Shareholder Services, Glass Lewis, Engine No.1, Trillium Asset Management, Arjuna Capital and Aviva Investor Americas and other firms. In those letters Jordan said climate activists could be violating antitrust law “by entering into agreements to ‘decarbonize’ corporations and reduce emissions to net zero,” which could have “potentially harmful effects on Americans’ freedom and economic well-being.”

In March, President Biden vetoed a GOP-led bill aimed at preventing pension fund managers from considering climate change and other ESG factors in investment decisions.

Legal showdown

In response to the earlier letter, GFANZ, chaired by Michael Bloomberg, and its affiliates such as the Net Zero Asset Managers initiative, produced nearly 800 documents, with redactions.

“GFANZ’s response without compulsory process has been inadequate,” Jordan wrote. Several banks and insurance companies have dropped out of the group, in part due to Republican pressure tactics.

As You Sow has not provided any documents to the committee.

“We just think that this whole effort is a misguided anti-climate effort,” Behar said. “So I’ll send them back a letter and describe in more detail why we think this is misguided.”