Financial Executives from Glasgow Face Scrutiny by House Judiciary

A U.S. House committee recently conducted interviews with two leaders from the Glasgow Financial Alliance for Net Zero (GFANZ), former central bank governor Mark Carney and former U.S. Securities and Exchange Commission Mary Schapiro. This move represents an escalation in their efforts to address global climate change through coalitions.

The House Judiciary Committee, led by Republican Chairman Jim Jordan, R-Ohio, arranged these interviews earlier this year due to concerns that GFANZ may be enabling collusion that could violate U.S. antitrust laws. Several GOP-controlled states have already been challenging Wall Street firms for participating in climate coalitions and promoting ESG-focused investment products, fearing the potential impact on jobs in the fossil fuel industry.

This new federal-level mobilization by Republicans signals a heightened focus on ESG issues. While passing legislation may be challenging with a Democratic-controlled White House and Senate, any proposed bills could provide insights into potential future actions under a new administration led by former President Donald Trump if he were to win the election in November.

The Judiciary Committee also requested interviews with Michael Bloomberg, the majority owner of the financial data and news provider that supports GFANZ, as well as GFANZ representatives Patricia Hudson and Sara Simonds. However, it is unclear if they plan to participate in interviews. Representatives for Carney, Schapiro, Bloomberg, Hudson, Simonds, and GFANZ declined to comment.

GFANZ, initiated by Carney and endorsed by the United Nations in 2021, aims to facilitate collaboration among financial institutions to reduce greenhouse gas emissions. With over 650 members, including banks, insurers, asset managers, and investment consultants, GFANZ has gained significant momentum.

Schapiro and Carney were interviewed by the committee in February and April, respectively, without the need to take an oath. The interviews focused on their interactions with other Wall Street leaders, such as BlackRock CEO Larry Fink. The committee plans to hold a hearing on June 12 to further investigate collusion in ESG investing, with climate-focused investor groups expected to participate.

Although no antitrust lawsuits have been filed against any climate coalitions, concerns about potential collusion have prompted some firms to withdraw from such coalitions or to reduce their level of collaboration. Notable instances include the dissolution of the Net Zero Insurance Alliance, replaced by the Forum for Insurance Transition to Net Zero, due to regulatory concerns in certain states.

Despite the efforts of climate coalitions, global emissions reduction targets, set in the 2015 Paris Agreement to limit global warming, have faced challenges. BlackRock, a prominent asset manager, has faced scrutiny in Republican-led states over its ESG policies, leading to a shift in their approach to ESG investing.