Red states seek to break up major climate finance group

Republican attorneys general from nearly two dozen states are aiming to disband a U.N. coalition of the world’s largest financial companies dedicated to reaching net-zero fossil fuel emissions by 2050.

Twenty-two state AGs have warned the Net Zero Financial Service Providers Alliance, or NZFSPA, that they believe the group is violating U.S. antitrust and consumer protection laws because of its collaboration to decarbonize the global economy.

The Republican officials hope to replicate the success from earlier this year against a U.N. coalition of insurance companies with the same net-zero goals known as the Net Zero Insurance Alliance. That group saw at least seven of its members — including five of the eight founding signatories — flee after Republican AGs warned the alliance that it could subvert U.S. antitrust laws.

The AGs say they’re prepared for potential legal action against NZFSPA, which was formed in 2021.

“Sometimes, scrutiny and giving people an opportunity to think about what they’re doing is sufficient,” Tennessee Attorney General Jonathan Skrmetti, who is leading the effort against NZFSPA, told The Washington Times. “There are laws out there addressing companies working together to the detriment of consumers. If the facts bear it out, I don’t think any of the AGs concerned about this would hesitate to use their enforcement authority.”

NZFSPA did not respond to a request for comment.

The alliance’s push to reach net zero by 2050 is part of the climate-conscious investment strategy known as environmental, social and corporate governance investing, or ESG, that Republicans call “woke capitalism.” GOP elected officials have opposed the financial practice in recent years with public pressure and policy campaigns.

NZFSPA includes major international financial corporations like KPMG, Morningstar, Deloitte, Bloomberg, Ernst & Young, Grant Thornton, Moody’s and S&P Global.

Signatories must pledge to “align all relevant services and products to achieve net-zero greenhouse gas emissions by 2050 or sooner,” set internal emissions reduction targets every five years and make climate-related financial disclosures.

NZFSPA is part of the U.N.-backed Glasgow Financial Alliance for Net Zero, which calls itself “the world’s largest coalition of financial institutions committed to transitioning the global economy to net-zero greenhouse gas emissions.”

“The goal here is not to constrain their behavior — it’s to constrain their cooperation,” Mr. Skrmetti said. “Any time companies start cooperating across an industry, we need to at least be suspicious about it.”

Financial institutions that promote ESG investing and those with net zero goals argue clients have the choice to make sustainable investment decisions based on their values or beliefs and that climate change poses a significant threat to long-term returns across the global economy.

Mr. Skrmetti said the concern among Republican AGs is not that individual companies may engage in such climate-friendly practices but rather the alliance’s “undue influence” that could manipulate swaths of the economy.

“Every company has a right to make those decisions,” he said. “The problem here is the collusion between companies, which creates a worry that consumers may be harmed if the market is being moved in a direction based on ideology or policy preference as opposed to competition between market participants for the good of consumers.”

The other 21 states in the effort against NZFSPA include Alabama, Alaska, Arkansas, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, Oklahoma, Ohio, South Carolina, Utah, Virginia, West Virginia and Wyoming.