I realize it seems like a bit of a stretch to pose this question. But trust me. I have a good reason for doing so. It’s important to know the answer to this question. If it is, Rep. Jim Jordan (R-OH), Chairman of the House Judiciary Committee, has a bigger ESG problem on his hands than he knows. If the American Petroleum Institute (API), founded in 1919, is an ESG Cartel, this former four-time NCAA championship wrestler will find himself in a hammerlock grip even he won’t be able to break.
And lest you think that I, like Mr. Jordan, am grasping at invisible straws, let me present sone evidence for this concern. As stated on their website, “API represents all segments of America’s natural gas and oil industry, which supports more than 11 million U.S. jobs and is backed by a growing grassroots movement of millions of Americans. Our nearly 600 members produce, process and distribute the majority of the nation’s energy, and participate in API Energy Excellence®, which is accelerating environmental and safety progress by fostering new technologies and transparent reporting.” Six hundred members is certainly the groundwork for an ESG cartel given the talk about things like environmental and safety progress and transparent reporting. Stuff at the core of ESG 🐥.
Some context will be useful. As I write, Mr. Jordan is fearlessly pursuing his fiery and mindless anti-ESG campaign, with a special focus on climate change. It is always difficult to ascertain the motives of others. Maybe he thinks there’s still some fund raising and vote getting juice in being anti-ESG, although evidence suggests this is more of a cactus than an orange. Maybe he’s doing it simply because he can as Chairman and wants to flex his rassler’s muscles and mess with some woke folks he doesn’t like. Maybe he’s still in a bad mood at losing the House Speakership despite his strong arm rassler’s moves to cow enough members of his conference into submission and cry uncle and vote for him.
On August 1, 2023 he issued nearly identical four-page letters to Andrew Behar of the NGO As You Sow; four asset managers (Natasha Lamb and Farnum Brown of Arjuna Capital, Mirza Baig of Aviva Investors Americas, Christopher James and Jennifer Grancio of Engine No. 1 [famous for its campaign to put three people with deep oil and gas experience on the board of ExxonMobil, [something the company had never had before], and Matthew W. Patsky of Trillium Asset Management; and two proxy advisory firms, Kevin Cameron of Glass Lewis and Gary Retelny of Institutional Shareholder Services. The central thesis of the letter is this:
“The Committee on the Judiciary is conducting oversight of the adequacy and enforcement of U.S. antitrust laws. We write because X is potentially violating U.S. antitrust law by entering into agreements to “decarbonize” corporations and reduce emissions to net zero—with potentially harmful effects on Americans’ freedom and economic well-being. Accordingly, to advance our oversight and inform potential legislative reforms, we write to ask X to produce relevant documents and information.”
Mr. Jordan appears to be especially exorcised about Climate Action 100+ and the Net Zero Asset Managers initiative (NZAM) and darkly warns that the named organization “appears to have colluded with other institutional investors to work with the companies in which [they] invest to . . . deliver net zero [greenhouse gas (GHG)] emissions by 2050.” He warns that these “Collusive agreements harm competition and consumers and are illegal under the Sherman Act.8.” He further worries that “The potential consequences for American freedom and economic well-being are far-reaching.”
The letter then lists six items of requested information, just about everything under the sun the organization is doing with respect to climate change. The given deadline is two weeks—5:00 p.m. on August 15, 2023. I’ll admit that the footnotes in this letter are a cut above the ones I analyzed in my still-unreplied-to letter to Mr. Jordan. No hard feelings on that. I know he has a lot on his plate trying to slay the demon of ESG and ignore the reality of climate change. Still, it’s a bit hard to know what Mr. Jordan is hoping to accomplish with this admittedly deft and dashing political theater. As Clint Rainey of Fast Company notes “some of the accusations he levels sound as if the committee is simply quoting the legal definition of run-of-the-mill shareholder services.” Furthermore, “Jordan’s end goal is also fuzzy, since he is a legislator, after all, and not a member of the executive branch that enforces federal laws.”
I do have to admit to scratching my head a little bit about who he chose to send these letters to, especially the asset managers and As You Sow. After all, there are 700 global investors with more than $68 trillion in assets under management across 33 markets. The firms he wrote are small in terms of assets under management. One hypothesis is that he found some that are “ESG friendly” and making this request would place a huge burden on them. It is a raw exercise of naked power. He’s doing this because he can.
Mr. Jordan seems to be particularly unhappy with As You Sow and on November 1, 2023 served Mr. Behar a subpoena, commanding him to appear before his committee on December 1, 2023. The subpoena is attached to a letter from Mr. Jordan to Mr. Andrew D. Herman of Lawrence & Bundy, LLC who has been helping As You Sow respond to Mr. Jordan and clarify just exactly what the antitrust issues are of concern. There’s some legal stuff about antitrust and whining about the lack of responsiveness from Mr. Behar. I’m not a lawyer so I can’t really opine on the quality of Mr. Jordan’s legal arguments. After all, he did graduate from Capital University Law School in Columbus, Ohio, although he never passed the bar exam. I must admit I did get a chuckle out of this given that Mr. Jordan never appeared for the subpoena he received from the now defunct House committee investigating the January 6. 2020 attack on the capital.
When it comes to the back-and-forth on the validity of the antitrust claims being made by Mr. Jordan, I’ll let As You Sow speak for itself as it did in this November 1, 2023 press release. Mr. Behar noted that “Contrary to the allegations in the subpoena, reducing climate emissions is critical to protecting American freedom and economic well-being.” Ms. Danielle Fugere, president and general counsel, stated that “Although we will continue to work with the Committee to answer reasonable questions, the subpoena is flawed, with demands that are inapplicable to As You Sow, and is so broad as to be virtually unbounded. Further, the antitrust allegations at the heart of the Committee’s argument twists both the facts and the law. Our work increases competition and fosters new, low-cost energy innovations.”
I’d like to go down a different path, one inspired by some remarks in the letter Mr. Jordan sent to Mr. Herman. First, there is the clever sleight of hand in using the words “collusion, collusive, and collusively” a total of 13 times. An amateur would read this as a clear signal that Mr. Jordan isn’t kidding about this antitrust stuff. Think again. Mr. Donald Trump fanboy Mr. Jordan knows full well that his political icon declared that “collusion is not a crime” when complaining about Mr. Robert Mueller’s investigation of where his 2016 campaign colluded with Russia to help secure his election. Clearly collusion is not the issue here; it’s something much more insidious. “ESG cartels 😱.”
Just when I thought there was nothing new to be said from the crazy right rantings about ESG, Mr. Jordan proves me wrong by invoking “ESG cartels!” As a friend of mine said, “clever and catchy” and I have to agree. Maybe I’ve been underestimating Mr. Jordan’s intellectual prowess and verbal acuity. But I’m still left not knowing exactly what an ESG cartel really is.
The term isn’t defined so context is important. In his letter to Mr. Herman, Mr. Jordan states, “As we explained both above and in our original letter, As You Sow has entered into apparently collusive agreements with Climate Action 100+ and other ESG cartels.” Footnote 35 to this claim references footnote 34 which refers to footnote 3 in the August 1 letter which is: “AS YOU SOW, ABOUT US, https://www.asyousow.org/about-us.” I dutifully checked out this link. No mention of cartels. In fact, the term “ESG cartel” is not used in any of the August 1 letters. This leaves me still grasping to fully appreciate this new front Mr. Jordan has opened in the “ESG Culture Wars.”
So I carefully went back again to the full text of Mr. Jordan’s letter to Mr. Herman. And then I found it! The second paragraph states that “Corporations are collectively adopting and imposing left-wing environmental, social, and governance (ESG)-related goals, and the Committee is concerned that As You Sow appears to facilitate collusion that may violate U.S. antitrust law.” Now I get it 😎! It’s corporations that are forming these ESG cartels and Mr. Jordan is magnanimously giving As You Sow some credit for this. But maybe more credit than they deserve.
Consider the American Petroleum Institute (API), a potentially prime example of an ESG cartel. I have no idea of whether As You Sow is working with them “to facilitate collusion that may violate U.S. antitrust law”or not but given who As You Sow is and who the API is, this sounds rather unlikely to me.
The API has published its “API Climate Action Framework” that is based on five actions: (1) Accelerate Technology and Innovation, (2) Further Mitigate Emissions from Operations, (3) Endorse a Carbon Price Policy, (4) Advance Cleaner Fuels, and (5) Drive Climate Reporting. They also state, “The challenge of meeting the world’s growing need for energy while simultaneously ushering in a lower-carbon future is massive, intertwined and fundamental. It is the opportunity of our time – governments, industries, and consumers must rise to seize it together.” This reference to “industries” sounds pretty cartel-like to me. Digging deeper into the API website, evidence mounts that they are an ESG cartel. There are 35 references to ESG covering topics such as “Q&A: Transparency and Standardization in ESG Reporting” and “API Standards, Guidance Support Industry’s ESG Commitments.”
Of course, it’s one thing for a trade association to be promoting frameworks and initiatives around climate change and ESG more generally, and quite another thing for its members to be putting them into practice. Deeds not words, right? So I did a little fact check on ExxonMobil, who I’ve written about before. I studied what ExxonMobil is doing in terms of sustainability. It is the worst nightmare Mr. Jordan could imagine😱 . For example:
· “Our purpose is to grow shareholder value by creating sustainable solutions that improve quality of life and meet society’s evolving needs.”
· They organize their sustainability reporting in terms of ESG.
· They provide extensive disclosures on ESG performance.
· They support a Just Transition.
· They have an ambition to achieve net zero in carbon reductions for operated assets by 2050.
So, yep, looks like I was right 🐥. The API is a most formidable ESG cartel. Most academics would just leave it at that. They’ve substantiated their hypothesis to the acclaim of their peers and leave it at that. But I’m more of an action-oriented type of guy who likes to translate research findings into practical recommendations. It’s easy to do here. For Mr. Jordan to succeed in his campaign to eliminate ESG cartels, he should quit wasting his valuable time with little NGOs like As You Sow, a few small asset managers, and two proxy advisory firms.
He needs to get to the root of the problem which is corporate ESG cartels like API. They seem to exist on their own volition—and for many years—without the facilitation of the groups Mr. Jordan is wasting valuable time and real and electronic paper with. If he is going to truly crush ESG cartels, he needs to start writing them threatening letters. In the case of the API, he should!demand they send him anything that has a whiff of ESG in the last 104 years. Tell them to deliver it in two weeks! Tell them they need to appear the day before Thanksgiving to be held accountable for the pernicious progressive ESG policies they are creating for their members. Hey, and while he’s at it, why not write Mr. Darren Woods, Chairman and CEO of ExxonMobil as well? Lean on him Big Time like you’ve been leaning on Mr. Behar. As a corporate CEO he’ll probably be more responsive to you than some guy from a little NGO.
Mr. Jordan, your conference and your voters are counting on you. If you can’t eliminate ESG cartels like the API, those who supported you for Speaker of the House will be sorry that they did.
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