House Republicans have 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. This accusation stems from a report released by the Subcommittee on Antitrust, Commercial and Administrative Law, which suggested evidence of a left-wing environmental activist and financial institutions cartel. The perceived goal of this so-called climate cartel is to leverage negotiations, shareholder resolutions, and board of director votes to decarbonize companies.
The hearing highlighted the ongoing Republican-led campaign scrutinizing Environmental, Social, and Governance (ESG) investing practices. Despite these allegations, witnesses like Ceres, Arjuna Capital, and Minnesota Attorney General Keith Ellison defended their climate-related investment decisions and emphasized the importance of reducing emissions. CalPERS’ Chief Investment Officer, Dan Bienvenue, emphasized the fund’s commitment to producing strong returns for its pensioners while also considering climate-related risks. He argued that collaboration with groups like Climate Action 100+ is not collusion but rather a necessary step in addressing long-term investment viability.
In contrast, Democrats on the committee dismissed the antitrust allegations as “embarrassing” and “absurd.” They viewed the hearing as an attack on responsible fiduciary investing and shareholders exercising their legal rights. Representative Eric Swalwell pointed to the Teachers Retirement System of Texas as an example, noting its lower returns compared to CalPERS due to anti-ESG policies. This comparison raised questions about the effectiveness of different investment strategies.
The debate surrounding ESG investing and its impact on climate change continues to garner attention in the financial and political spheres. While Republicans raise concerns about collusion and antitrust violations, Democrats argue in favor of responsible investing practices. The role of institutional investors like CalPERS in advocating for sustainability and considering climate-related risks remains a point of contention. As the conversation evolves, it is essential to consider both the financial implications and environmental benefits of ESG investing to achieve a balanced and sustainable approach to addressing climate change.