US House committee grills Carney, Schapiro in push against climate coalitions

[June 07, 2024]  By Isla Binnie and Virginia Furness

(Reuters) - A U.S. lawmakers' committee conducted interviews with two Glasgow Financial Alliance for Net Zero (GFANZ) leaders, former central bank governor Mark Carney and former U.S. Securities and Exchange Commission Mary Schapiro, in an escalation of their push against global coalitions to tackle climate change.

The House of Representatives' judiciary committee, which is controlled by Republicans led by its chairman Jim Jordan, set up the interviews earlier this year out of concern that GFANZ "appears to facilitate collusion that may violate U.S. antitrust law," according to letters to GFANZ staff reviewed by Reuters and people familiar with the matter.

Several Republican-controlled states have been already targeting Wall Street firms for entering into climate coalitions and marketing environmental, social and corporate governance (ESG)-focused investment products, fretting that these initiatives will harm jobs in the fossil fuel industry.

This latest mobilization of Republicans at a federal level, however, marks a new phase in their war on ESG. While legislation is unlikely as long as Democrats control the White House and the Senate, any bill they propose could offer hints at what a new administration led by Republican Donald Trump, should he prevail in the election in November, could try to implement.

The judiciary committee also asked to interview Michael Bloomberg, the majority owner of the eponymous financial data and news provider who helps fund GFANZ's secretariat, as well as GFANZ Patricia Hudson and Sara Simonds, according to the letters reviewed by Reuters. They have not yet made an appearance and Reuters could not learn if they plan to do so.

Carney, Schapiro, Bloomberg, Hudson and Simonds could not be reached for comment, and a GFANZ spokesperson declined to comment on their behalf as well as on behalf of the organization.

Spearheaded by Carney and backed by the United Nations, GFANZ was launched in 2021 for financial firms to liaise on efforts to curb greenhouse gas emissions. It now has more than 650 members, including banks, insurers, asset managers, financial service providers and investment consultants.

Schapiro and Carney were interviewed for several hours by the judiciary committee on Feb. 14 and April 17, respectively, the sources familiar with the matter said. Lawyers working for Republicans and Democrats on the committee asked the questions, and Schapiro and Carney were not required to take an oath, the sources added, requesting anonymity because the matter is not public.

Head of Task Force for Climate-related Financial Disclosures (TCDF) Secretariat, Mary Schapiro, speaks during an event to launch the private finance agenda for the 2020 United Nations Climate Change Conference (COP26) at Guildhall in London, Britain, February 27, 2020. Tolga Akmen/Pool via REUTERS/ File Photo

In the interviews, Schapiro and Carney were asked about their communications with other Wall Street leaders, including BlackRock CEO Larry Fink, the sources said. A BlackRock spokesperson did not immediately respond to a request for comment.

The judiciary committee has scheduled a hearing on June 12 to further investigate collusion in ESG investing, according to a notice it has circulated. Investor groups focused on tackling climate change are expected to appear.

NO PRECEDENT

No antitrust lawsuit has so far been brought against any climate coalition of companies. Yet fear of being accused of colluding has driven some financial firms out of such coalitions or has pushed them to reduce their level of co-ordination.

In the most prominent of such cases, the Net Zero Insurance Alliance, a coalition of insurers backed by GFANZ, was dissolved earlier this year after many of its members fled fearing an antitrust crackdown in states in which they are regulated, such as Iowa. This grouping was replaced by the Forum for Insurance Transition to Net Zero, which has looser membership requirements.

Climate coalitions have also suffered from lack of enough action among their members. Prospects of bringing global emissions down to zero on a net basis, a target born out of a 200-country pact struck in Paris in 2015 to limit global warming to 2 degrees Celsius (3.6 degrees Fahrenheit) above preindustrial times, have dwindled.

BlackRock, the world's largest asset manager, has been at the forefront of scrutiny in some Republican-run states over its ESG policies. Fink said last year BlackRock lost around $4 billion in assets under management as a result of controversy. He has stopped using the term ESG, arguing it has become too politicized.

(Reporting by Isla Binnie in New York and Virginia Furness in London; Editing by Greg Roumeliotis and Stephen Coates)

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