Since the political posturing of the anti-ESG movement began many of us have been wondering, will US antitrust law doom climate pacts? A new legal analysis published earlier this month by Columbia Law School’s Sabin Center for Climate Change Law suggests that the chances of that happening are slim.
Much of the threatened antitrust litigation revolves around alleged boycotting of fossil fuels by financial services firms that are members of net-zero alliances. However, the memo points out two major issues with this legal theory. For one, the targeted financial services firms are some of fossil fuel’s biggest funders, so there’s a question of how exactly a boycott is being carried out if business is still being conducted with the alleged target of the boycott.
Secondly, the way that antitrust law defines an illegal boycott differs substantially from what is alleged. In the author’s words:
“The term “boycott” under antitrust law refers to a specific type of horizontal agreement, where firms agree to take concerted, anti-competitive action against a competitor. Collective (or group) boycotts occur when two or more competitors agree to refuse to deal with a particular customer or supplier, … This is distinct from a unilateral refusal to deal… [and] businesses have a right to choose their partners (although such a refusal could, in rare cases, trigger antitrust liability if the exclusionary conduct has primarily anti-competitive effects).”
This creates two major issues for anti-ESG proponents bringing antitrust actions. They must prove that:
- There is actually a boycott taking place;
- That the boycott is a collective boycott that may be prohibited and not a unilateral boycott.
Given the facts, this may be a hurdle that is too high to clear for anti-ESG attorneys general.