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Compliance December 18, 2023
State Street, BlackRock Subpoenaed by House, Asked to Produce ESG Communications
House Republicans identify Net Zero initiatives as potentially collusive and unlawful.
Reported by Paul Mulholland
The U.S. House Committee on the Judiciary, under the leadership of Chairman Jim Jordan, R-Ohio, issued subpoenas to BlackRock and State Street Global Advisors on Friday. The subpoenas require both asset managers to turn over all documents and communications related to decarbonization goals, related investment decisions and agreements with other organizations related to decarbonization and environmental, social and governance investing.
The committee sent requests for documents to both managers on July 6, and the firms had until July 20 to comply with the request.
The requests say the committee is investigating the managers for collusive behavior designed to reduce investment in fossil fuels in a manner that could violate antitrust law and restrict consumer choice and American economic growth. The requests do not spell out the provisions of the Sherman Antitrust Act of 1890 that were potentially violated.
The July letters explained that the managers’ involvement with the Net Zero Asset Managers Initiative and Climate Action 100+, two initiatives with the goal of reaching net zero of greenhouse gas emissions by 2050, were collusive in nature and possibly unlawful.
The committee also noted the size and shareholder voting power of both managers. According to the July letters, BlackRock votes 9.8% of the shares in the S&P 500 by volume, and State Street votes 5.7%.
On Friday, Jordan wrote that the responses to the request had been inadequate, though he did not explain what precisely was missing. The subpoena issued to BlackRock stated that BlackRock produced 7,745 total responsive documents and said it would need until February to produce all responsive documents. The subpoena released by the committee does not include a deadline for producing the requested documents.
State Street provided the following statement: “We have cooperated fully with the Committee and will continue to do so going forward. We remain confident that we have not violated any antitrust laws.”
The Judiciary Committee has issued similar subpoenas to a range of organizations at various points this year, all of which requested documents related to ESG and carbon emissions. In November, As You Sow, a nonprofit shareholder representative and climate action advocacy organization, was subpoenaed for documents with a deadline of December 1. As You Sow did not respond to a request for comment.
The committee also subpoenaed Vanguard and Arjuna Technologies Ltd. on December 11. Those subpoenas were issued on the same grounds as those issued to State Street and BlackRock: that climate initiatives are collusive and could violate antitrust laws.
House Republicans have also attempted to overrule the Department of Labor’s final rule on ESG investing in retirement plans through the budget process and other bills designed to ensure fiduciaries only consider “pecuniary factors.”
As House Republicans continue to pursue an anti-ESG agenda, public officials elsewhere have staked out different positions. This week, Brooke Lierman, a Democrat and the comptroller of Maryland, wrote a commentary published in the Baltimore Sun that criticized congressional anti-ESG efforts.
“Unfortunately, some federal lawmakers and officials in other states are pushing proposals that would limit my ability to access essential information and assess all types of risks and returns,” Lierman wrote. “At least four bills pending in Congress now seek to prevent fiduciaries from using all available information to make investment decisions. Each bill works slightly differently, but they all start and end from the same premise: that the only responsibility of fiduciaries is to prioritize short-term financial returns over all other factors.”
