Appearing May 5th on a podcast, FTC Chairman Andrew Ferguson said the FTC is “looking at” whether “businesses are agreeing not to invest in fossil fuels” to advance Environmental, Social, and Governance (ESG) goals. He added that this issue is “really important to us.” This is consistent with some views that the developments in this area over the past few years may have resulted in conduct that could be inconsistent with U.S. antitrust laws
Chairman Ferguson’s statement does not mean that, at this point, the FTC has initiated a formal non-public investigation targeting certain companies. However, his statement is notable because it’s a shift from suggesting the FTC should scrutinize ESG practices to indicating that the FTC is now actively doing so. He also noted that this issue “went unaddressed” over the last four years other than by some Republican states. This development is not a surprise. In Congressional testimony, he said the FTC should scrutinize the “alleged collusion among large asset-management firms intended to drive up the prices of fossil fuels in order to meet emissions targets set by those firms” that was described in a House Judiciary Committee report last year. As reported by Punchbowl News, he previously stated investigating and prosecuting ESG collusion would be part of the FTC’s agenda if President Trump nominated him to the position.
As Dechert recently reported, legal risks in this area have increased over the past year. Chairman Ferguson’s statement that the FTC is “looking at” this issue further elevates these risks. With the FTC now apparently actively examining ESG practices, businesses and investors should closely watch for further developments and potential enforcement actions and assess related risks for themselves.
