11.07.2022 0

Senate Republicans warn ESG law firms to ‘preserve relevant documents’ of ‘collusive effort’ to restrict American energy production in violation of antitrust

By Robert Romano

“Over the coming months and years, Congress will increasingly use its oversight powers to scrutinize the institutionalized antitrust violations being committed in the name of ESG, and refer those violations to the [Federal Trade Commission] FTC and the Department of Justice.”

That was Sen. Tom Cotton (R-Ark.), anticipating an imminent Republican takeover of the U.S. Senate on Nov. 8, in a letter co-signed by Senate Judiciary Committee Ranking Member Chuck Grassley (R-Iowa) and Sens. Mike Lee (R-Utah), Marsha Blackburn (R-Tenn.) and Marco Rubio (R-Fla.), being sent to 51 law firms whose clients utilize Environmental, Social and Governance (ESG) investment initiatives to attract so-called woke and green capital by emphasizing climate sustainability goals in an anticompetitive manner to artificially restrict investment into carbon-based energies including coal and oil in violation of federal antitrust laws.

The Senators alleged these firms and their clients are engaged in a “collusive effort to restrict the supply of coal, oil, and gas, which is driving up energy costs across the globe and empowering America’s adversaries abroad.”

Sen. Cotton and company warned the 51 law firms to preserve any and all records in anticipation of House and Senate oversight and subpoenas should Republicans reclaim majorities: “To the extent that your firm continues to advise clients regarding participation in ESG initiatives, both you and those clients should take care to preserve relevant documents in anticipation of those investigations.”

ESG investing has increased dramatically in the past two decades via private retirement funds regulated under the Employment Retirement Income Security Act (ERISA) thanks to a regulation by the Obama Labor Department in 2015 allowing ESG investments into tax-exempt retirement savings accounts, and also by individually directed tax-free retirement accounts. A 2020 regulation by the Trump administration to water that down was promptly overturned by the Biden Administration.

In addition, the $762 billion federal Thrift Savings Plan (TSP) for federal employee retirees began investing in ESG funds in 2022, following state government employee retirement funds in California, New York, Colorado, Connecticut, Maine, Maryland and Oregon.

As a result, ESG is said to be worth $41 trillion this year globally, and $50 trillion by 2025, about one-third of all assets under management, according to Bloomberg.

U.S. corporations appear to be all in on BlackRock’s investing scam, with a recent KPMG survey finding 82 percent of U.S. corporations are touting ESG sustainability goals in their corporate filings. I’d add, even though doing so by no means guarantees inclusion in hedge funds’ ESG funds like BlackRock, Vanguard, etc.

In other words, ESG investing is so successful in shifting companies to the stakeholder capitalism model that companies are adopting ESG goals of their own accord — in mere hopes of getting some that investment money by virtue signaling — without necessarily even boosting their companies’ capitalization.

ExxonMobil, the largest producer in the U.S., announced that it would produce about 3.7 million barrels of oil a day — about 18 percent of all U.S. consumption — from its facilities throughout the world, a level which would remain relatively unchanged through 2025. This year, the estimate for 2022 was up slightly to 3.8 million barrels a day, only expected to rise to 4.2 million barrels a day by 2027.

Chevron, the second largest U.S.-based producer, it currently produces about 3 million barrels a day, expected to rise by just 500,000 barrels per day by 2025 to 3.5 million barrels per day.

To lock in the cartel’s purposeful production slowdown — which artificially drives up prices — BlackRock has placed green activists onto the board of Exxon. Other hedge funds like Vanguard also make significant ESG investments.

In his annual shareholder letter to investors Fink said Russia’s invasion of Ukraine, the supply crisis and the inflation would all lead to even more green energy in the future: “Longer-term, I believe that recent events will actually accelerate the shift toward greener sources of energy in many parts of the world.” Particularly, the inflation of carbon-based energy would make green energy more price competitive: “Higher energy prices will also meaningfully reduce the green premium for clean technologies and enable renewables, EVs and other clean technologies to be much more competitive economically,” Fink said.

In other words, the inflation we’re all experiencing right now is the point in order to drive more green investment and bring about the zero-carbon future — all at the expense of domestic energy production in what could be the worst winter in decades as the world runs short of natural gas and fuel oil for heat.

And Senate Republicans have noticed, including Cotton and Grassley, the latter of whom will once again be Chairman of the Senate Judiciary Committee should Republicans pick up a net one seat in the Senate on Nov. 8 in Nevada, Georgia, Arizona or New Hampshire while holding seats in Pennsylvania, Ohio, Florida and elsewhere.

The Senate letter comes after a group of 19 Republican Attorneys General led by Arizona Attorney General Mark Brnovich and Nebraska Attorney General Doug Peterson have threatened the $10 trillion hedge fund BlackRock with antitrust legal action in an Aug. 4 letter to BlackRock CEO Larry Fink accusing the company of “intentionally restrain[ing] and harm[ing] the competitiveness of the energy markets” with its market dominance of retirement investments.

Brnovich and Peterson added, “coordinated conduct with other financial institutions to impose net-zero [carbon emissions by 2050] … raises antitrust concerns. Group boycotts, restraining trade, or concerted refusals to deal, ‘clearly run afoul of’ Section 1 of the Sherman Act [according to the Supreme Court]. Section 1 prohibits ‘[e]very … combination … , or conspiracy, in restraint of trade or commerce.’ Regarding the definition of a ‘combination,’ the Supreme Court has held that this language prohibits ‘concerted action.’”

The fight against ESG is now being waged on multiple fronts. With anticipated House and Senate majorities, and state Republican Attorneys General on the case, Republicans here are strongly signaling they finally intend to rein in ESG’s stranglehold on American energy production, but it will not be easy. In addition to the 2015 Labor Department regulation for employer-based retiree plans and federal and state retiree investments, tax-free individual retirement accounts make up the bulk of investments.

To turn off the spigots, a GOP Congress and Republican-led states will have to be willing to address all of the government incentives, regulation-based, tax-based or otherwise — even and especially if they irk Wall Street — that are restricting American energy production when prices are rising and we need to boost our long term supply — before it’s too late.

Robert Romano is the Vice President of Public Policy at Americans for Limited Government.  

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