House Republicans recently accused the California Public Employees’ Retirement System (CalPERS) of being part of a “climate cartel” that colludes with other investors to push companies to reduce their carbon footprint. The Republicans alleged that institutional investors like CalPERS, Blackrock, Vanguard, and State Street Global Advisors violated antitrust laws by working together to fight climate change. This claim was made during a hearing by the House Judiciary subcommittee on Antitrust, Commercial and Administrative Law.
The accusations stem from the Subcommittee’s investigation into environmental, social, and governance (ESG) practices of institutional investors. CalPERS, along with other witnesses like Ceres and Arjuna Capital, are members of Climate Action 100+, a group focused on reducing emissions. Despite the allegations, CalPERS’ Chief Investment Officer, Dan Bienvenue, reiterated that the fund’s priority is to generate strong returns for its 2.2 million pensioners. He emphasized that CalPERS invests in a variety of companies, including oil and gas, and believes in collaboration rather than collusion when advocating for climate-related disclosures and risk considerations in investments.
The accusations of antitrust violations against CalPERS and other institutional investors are not only unfounded but also reflect a misunderstanding of responsible fiduciary investing. Democrats on the committee dismissed the allegations as baseless and argued that investors have the right to exercise their legal rights under the law. Rep. Eric Swalwell highlighted the Teachers Retirement System of Texas as an example of the negative impact of anti-ESG policies, with lower returns compared to CalPERS’ investments.
ESG investing has gained traction in recent years as investors increasingly consider environmental, social, and governance factors in their decision-making processes. While some critics may view ESG initiatives as imposing radical goals, proponents argue that these measures are essential for long-term sustainability and responsible investing. CalPERS’ commitment to addressing climate-related risks in its portfolio exemplifies the evolving landscape of investment practices that prioritize both financial returns and social responsibility.
The allegations of a “climate cartel” involving CalPERS and other institutional investors are unwarranted and fail to recognize the importance of ESG considerations in modern investment strategies. Instead of viewing these initiatives as antitrust violations, it is crucial to understand the broader impact of responsible fiduciary investing on both financial performance and sustainability. CalPERS’ collaborative efforts with Climate Action 100+ and similar groups demonstrate a commitment to balancing financial returns with environmental stewardship, setting a positive example for the investment community as a whole.