House Republicans subpoena investment firms over environmental pledges

WASHINGTON (CN) — House Republicans stepped up their inquiry into investment firms’ sustainability activities Monday, demanding that two such companies hand over information about their efforts to decarbonize their assets.

GOP lawmakers for months have taken aim at efforts by companies to consider environmental, social and corporate governance standards when conducting business. Known by the abbreviation ESG, the philosophy signals to investors that a publicly traded company operates in a socially or environmentally conscious manner.

Republicans, though, have blasted ESG and efforts by the Biden administration to support its use, arguing among other things that such standards force companies to prioritize sustainability over good business practices.

More recently, the House Judiciary Committee, led by Ohio Republican Jim Jordan, has dialed in on the Glasgow Financial Alliance for Net Zero, a coalition of hundreds of international financial institutions which advocates for decarbonizing the global financial system.

Lawmakers investigating the coalition and its subgroups have accused members of entering into “collusive” agreements which they suggest violate antitrust law by dissuading competition among investment firms.

The Judiciary Committee has demanded that some of the industry’s largest companies, such as BlackRock and the Vanguard Group, give Congress more information on their ESG efforts. Writing to those firms over the summer, lawmakers contended that agreements to reduce the investment industry’s carbon footprint would have “potentially harmful effects on Americans’ freedom and economic well-being.”

Unsatisfied with the information sent along by the companies in his crosshairs, panel chair Jordan on Monday issued subpoenas to Vanguard and Arjuna Capital, a sustainability-focused investment firm.

In a letter accompanying the legally binding summonses, the Ohio Republican told the two companies that his committee would use the requested information for future legislative action, such as “whether existing civil and criminal penalties and current antitrust law enforcement efforts are sufficient to deter anticompetitive collusion in the investment industry.”

Jordan also cast aspersions on the Massachusetts-based Arjuna Capital, suggesting in his letter that the firm had “artificially limited” its responses to previous committee information requests.

A spokesperson for Arjuna Capital said that the company has “responded to and intend[s] to fully comply” with the Judiciary Committee subpoena. The spokesperson declined to comment on Jordan’s charge.

Meanwhile, a spokesperson for Vanguard said that the company “is committed to working constructively with lawmakers and has cooperated with the Committee’s requests, including producing tens of thousands of pages of relevant documents to date.”

“As an independent asset manager owned by the investors in our funds, we remain focused on helping everyday investors achieve their long-term financial goals,” the spokesperson said.

House Republicans’ push against ESG standards comes just months after the Biden administration vetoed a joint congressional resolution striking down a Labor Department rulemaking on the subject.

The agency rule, passed last year, allows retirement fund managers to take ESG standards into account when choosing where to make investments. The Labor Department has said the rulemaking simply clarifies existing guidelines — reasoning that the previous rules could be seen as corralling retirement fund managers away from ESG investments.

The White House, which vetoed the joint resolution this past March, offered full-throated support of ESG standards, arguing that Congress “would force retirement managers to ignore these relevant risk factors, disregarding the principles of free markets and jeopardizing the life savings of working families and retirees.”

Then-House Speaker Kevin McCarthy accused the Biden administration of siding with “woke Wall Street” over American workers.

West Virginia Senator Joe Manchin, a Democratic critic of the White House who has since said he will not seek reelection, said at the time that the administration was prioritizing a “radical policy agenda over the economic, energy and national security needs of our country.”

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