State AGs demand information about SBTi’s new net-zero guidelines for financial firms

The attorneys general of 23 states want details about the Science Based Targets initiative’s new net-zero guidance for financial institutions, suggesting that it violates antitrust laws by attempting to “squeeze important American industries into eliminating carbon dioxide production by some future date.”  

The request, coordinated by Iowa Attorney General Brenna Bird, is outlined in an Aug. 8 letter to SBTi CEO David Kennedy. “Net-zero programs are unrealistic and harm both American agriculture and industry,” the attorneys general write. “Making net zero a goal actively harms Americans, creates risks for energy independence and increases the cost of food.” 

The letter doesn’t have the same legal teeth as the subpoenas sent to SBTi and CDP in late July by Florida Attorney General James Uthmeier, but it is the next step in a coordinated anti-ESG campaign against financial institutions that have spoken publicly about cutting back investments in fossil fuels companies. 

“Interestingly, the letter does not invoke the Iowa AG’s statutory subpoena authority and is instead presented as an informal request from each of the state AGs for certain documents and information,” said Roy Prather, principal at law firm Beveridge & Diamond. “Failing or refusing to provide the information does not carry the same risk of penalties that is associated with the Florida AG’s subpoenas, but it is certainly an escalation with respect to attention and scope.”

States represented by the letter include Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Virginia, West Virginia and Wyoming.

The attorneys general have demanded a response before Sept. 8. SBTi declined to comment.

Financial institutions under pressure

The attacks on banks, insurers and other financial institutions with climate goals started about two years ago but ramped up once President Donald Trump took office in January. At least 18 states have enacted laws that make it possible to sue banks and others over their environmental, social and governance strategies.   

Many banks and asset managers, hoping to placate particularly aggressive states, have already exited high-profile industry net-zero campaigns that started in the 2020 timeframe — such as the Net Zero Asset Managers initiative and the Net Zero Insurance Alliance, both now defunct. 

The trigger for this latest investigation was SBTi’s July publication of the net-zero standard for financial companies. The framework was tested by about 30 companies. SBTi said 135 have committed to following it, and the AGs want those names. SBTi’s commitment dashboard shows that the vast majority of those committed to using the net-zero framework come from outside the U.S.

“SBTi and the financial institutions that commit to its standards risk violating federal and state antitrust laws as well as state consumer protection laws,” the letter said. “Some economic arrangements are illegal because they are unfair or unreasonably harmful to competition; the ‘good intentions’ behind them are irrelevant.”

While anti-ESG investigations have muzzled companies and prompted backpedaling by many of the largest financial institutions, so far, only one has turned into an actual antitrust complaint. 

That case, led by Texas, accuses BlackRock, State Street and Vanguard, as members of Net Zero Asset Managers Initiative and the Climate Action 100+, of conspiring to force coal companies to reduce production. A federal judge largely denied a motion for dismissal Aug. 1, which means the case is still very much alive.

Editor’s note: This story was updated to add details about the geographic origin of most companies currently committed to SBTi’s net-zero framework for the financial industry.