The Future of ESG and Antitrust Post-Election

While elections bring uncertainty, one antitrust issue is certain to play a prominent role regardless of the outcome; namely, the future of Environment, Social & Governance (ESG) initiatives.

One need look no further than the political theater that played out this summer with the House Judiciary’s investigation into antitrust concerns with ESG initiatives. In June, the House Judiciary Committee released an interim staff report detailing what it claimed was direct evidence of a “climate cartel” comprised of “left-wing activists and major financial institutions” that allegedly “collude to impose radical environmental, social and governance goals on American companies,” including decarbonization and net-zero emissions.

On the same day, Democratic members of the House Judiciary Committee released a rebuttal report accusing the majority of abusing its oversight authority and offering a robust antitrust analysis concluding that no antitrust law prevents private parties from collaborating voluntarily to address climate change risks. Subsequently, House Judiciary Committee Chairman Jim Jordan (R-OH) and Antitrust Subcommittee Chairman Thomas Massie (R-KY) demanded information from more than 130 U.S. companies, retirement systems, and government pension programs about their involvement with Climate Action 100+.

The increasingly sharp partisan divide on ESG antitrust issues creates a number of different scenarios based on the outcome of the election. If Vice-President Harris wins the election, we can likely expect the status quo to continue. While Assistant Attorney General Jonathan Kanter and FTC Chairwoman Lina Khan both acknowledge that ESG initiatives are not exempt from the antitrust laws, their views seemingly dovetail with the antitrust analysis conducted by Democrats in the Rebuttal Report. Future congressional investigations will likely depend on who wins control of each chamber, but regardless we can expect Attorneys General in red states to continue to pursue investigations and send warning letters to companies involved in ESG collaborations and initiatives.

The big change would come if former President Trump wins the election. In the last Trump administration, the DOJ Antitrust Division opened an investigation—later dropped—into whether four auto companies illegally coordinated when they entered an agreement with California to limit auto emissions. Since that time, Republican attacks on ESG initiatives have increasingly proliferated, and many of the rumored candidates on former President Trump’s short list for Attorney General have been heavily involved in the various investigations and warning letters.

In addition, while former President Trump has downplayed it, it is worth noting that Project 2025—the sweeping report issued by the Heritage Foundation as a blueprint for a potential Trump administration—takes a very strong view on ESG as an antitrust violation and recommends that the FTC set up an ESG/DEI collusion task force to investigate firms, particularly in private equity, for allegedly anti-competitive activity. Finally, if Republicans also control Congress, it is possible that these executive actions could be supplemented by additional congressional investigations and possibly even legislation.

Accordingly, regardless of who wins the election, ESG as an antitrust issue is likely here to stay. Stay tuned to PHast Track as we continue to evaluate how the election might impact companies including at the intersection of antitrust and ESG. Subscribe to receive PHast Track updates directly to your inbox.