Senate Republicans warn U.S. law firms over ESG advice

U.S. Senator Senator Tom Cotton (R-AR) listens to testimony in Capitol Hill in Washington, U.S., September 13, 2022. REUTERS/Evelyn Hockstein

(Reuters) - U.S. Republican lawmakers issued a warning to corporate law firms this week, opening a new front in a campaign against companies forming a new consensus on major issues such as climate change.

In letters dated Thursday to 51 large U.S. and global law firms, U.S. Senate Republicans Tom Cotton, Mike Lee, Chuck Grassley, Marsha Blackburn and Marco Rubio said they plan to use their congressional oversight powers "to scrutinize the institutionalized antitrust violations being committed in the name of ESG," referring to environmental, social and governance issues.

The senators cited a "collusive effort to restrict the supply of coal, oil, and gas, which is driving up energy costs across the globe and empowering America’s adversaries abroad." They said Congress would refer anticompetitive actions made in the name of ESG to federal antitrust authorities and told the firms they have a duty to inform clients of such regulatory risks.

"To the extent that your firm continues to advise clients regarding participation in ESG initiatives, both you and those clients should take care to preserve relevant documents in anticipation of those investigations," the letters said.

The letters were addressed to top partners and ESG practice leaders at many of the world's largest and most powerful law firms, including firms that regularly represent major energy and financial companies.

Representatives for several of the firms--including Kirkland & Ellis; Latham & Watkins; Morgan, Lewis & Bockius; Paul Hastings; Paul, Weiss, Rifkind, Wharton & Garrison; Skadden, Arps, Slate, Meagher & Flom; and Winston & Strawn--did not immediately respond to requests for comment.

Republicans across the United States have pushed back against companies that have embraced ESG commitments and taken liberal stances on abortion rights, gun control, climate change, diversity and other social issues. In July, Reuters found at least 44 bills or new laws in 17 conservative-led states that penalized such company policies.

There has been no major climate-related litigation on antitrust grounds so far, but some regulators and officials, such as Mark Brnovich, the attorney general of Arizona, have said they are exploring it.

During a September congressional hearing, Sen. Pat Toomey, the top Republican on the Senate Banking Committee, urged the largest U.S. banks to stop "embracing a liberal ESG agenda that harms America."

Mark Carney, co-chair of a group of financial firms that has pledged to tackle climate change, this week told Reuters its members were allowed to drop out of a United Nations initiative that mandates the phasing out of fossil fuels because of antitrust concerns.

Carney's Glasgow Financial Alliance for Net Zero (GFANZ), whose members include more than 550 financial firms with a combined $150 trillion of assets, said last week it would no longer require adherence to Race to Zero, a U.N. initiative that requires signatories to phase out fossil fuels.

Read More:

Carney defends dropping U.N. climate initiative over antitrust concerns

Republicans warn bank CEOs to steer clear of social, cultural issues

How Republican-led states are targeting Wall Street with 'anti-woke' laws

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

David Thomas reports on the business of law, including law firm strategy, hiring, mergers and litigation. He is based out of Chicago. He can be reached at d.thomas@thomsonreuters.com and on Twitter @DaveThomas5150.