Antitrust Risks and Considerations Related to ESG Initiatives and Net Zero Alliances

Antitrust authorities in the U.S. and abroad are intensifying their scrutiny of collaborative activities surrounding environmental, social and governance (ESG) initiatives, and net zero greenhouse gas (GHG) emission goals. While global regulators are developing frameworks to accommodate certain procompetitive sustainability agreements, U.S. enforcement agencies remain focused on traditional antitrust risks, particularly where conduct may resemble price-fixing, market allocation or group boycotts. As the state of enforcement continues to evolve, companies must carefully structure ESG collaborations and net zero activities to avoid per se violations of U.S. antitrust laws and to be prepared to substantiate the voluntary nature of and procompetitive attributes of these endeavors.

Regulatory Landscape: Developments at Home and Abroad

United States

• Enforcement Focus: Federal agencies, such as the Federal Trade Commission (FTC or Commission) and U.S. Department of Justice (DOJ), as well as several state attorneys general, are actively investigating ESG collaborations, especially those involving potential competitors. Recent lawsuits and congressional inquiries underscore the risk that even voluntary, well-intentioned agreements may be challenged as being anti-competitive:
  • The FTC launched an antitrust investigation into four truck and engine manufacturers after they voluntarily agreed with the California Air Resources Board (CARB) in 2023 to enter into the Clean Truck Partnership (CTP) to reduce emissions from medium- and heavy-duty trucks with internal combustion engines. One of the key provisions in the CTP was that the manufacturers agreed to phase out diesel-powered trucks regardless of the outcome of litigation challenging the underlying CARB rules. The investigation was closed in August 2025 without further action by the FTC after the four manufacturers made certain commitments to refrain from entering into a similar agreement with a state regulator in the future and agreed to certain reporting and disclosure obligations. FTC Chairman Andrew Ferguson noted in his statement closing the investigation that "The Clean Truck Partnership is an example of companies agreeing to eliminate competition and reduce output under the guise of Environmental, Social and Governance (ESG) objectives … ESG goals can never justify unlawful collusion." The Commission in a separate statement argued the CARB regulations were not protected under the state-action doctrine under antitrust law, noting that Congress utilizing its authority under the Congressional Review Act had withdrawn the California waiver that would have otherwise allowed the CARB regulations to go into effect. This situation highlights the intense antitrust scrutiny that can be applied if a small group of manufacturers controlling a majority of the marketplace enters into voluntary agreements to reduce its GHG emissions.¹
  • In December 2023, the U.S. House Committee on the Judiciary subpoenaed BlackRock and State Street Investment Management to assess potential anti-competitive conduct related to their participation in Climate Action 100+. Climate Action 100+ was a global initiative to ensure that the largest emitters of GHG emissions committed to take action on climate change. As of now, there has been no final report or formal outcome released by the Committee regarding these subpoenas. The investigation appears to be ongoing, and similar subpoenas have been issued to other organizations involved in ESG and climate advocacy, such as As You Sow.
  • In Texas v. BlackRock et al., No. 6:24-cv-00437 (E.D. Tex. filed Nov. 27, 2024), institutional investors were accused of violating state and federal antitrust laws by coordinating actions to restrict investment in fossil fuel companies, thereby allegedly distorting market competition. On Aug. 1, 2025, the U.S. District Court for the Eastern District of Texas denied BlackRock's motion to dismiss, finding that "antitrust law does not yield to the prevailing social policy of the day." This is obviously just a procedural step in the litigation and not yet a final substantive decision on the merits, but it again highlights the strict scrutiny that can be applied to collaborative ESG activities.
• Legal Standards: U.S. authorities apply traditional antitrust principles set forth in Section 1 of the Sherman Act and state antitrust and consumer protection laws when assessing ESG initiatives. Conduct that resembles price-fixing, market allocation or group boycotts is subject to per se condemnation, regardless of benign intentions or environmental or social objectives. Collaborations that foster innovation or the provision of new products or services to consumers may be analyzed under the rule of reason, balancing procompetitive benefits against anti-competitive effects.
• Political Context: ESG initiatives are a flashpoint in current political debates, with some state legislatures enacting laws targeting perceived boycotts of certain industries (e.g., fossil fuel companies) by ESG-motivated actors.

European Union, United Kingdom and the Netherlands

• Evolving Guidance: Regulators are clarifying when sustainability collaborations may be permissible. The EU, U.K. and Dutch authorities in particular have issued guidance allowing for exemptions from antitrust prohibitions if agreements meet strict criteria, including demonstrable efficiency gains, consumer benefits, necessity in achieving the benefits and preservation of competition.
• Informal Guidance: EU, U.K. and Dutch authorities also offer informal, nonbinding guidance to companies considering ESG collaborations, and good-faith reliance on such advice may mitigate penalties.
• Special Considerations: The U.K.'s "Green Agreements Guidance" (2023) is particularly permissive for climate change agreements, reflecting the urgency of climate action but still prohibiting classic anti-competitive conduct.

Key Antitrust Risks in Voluntary ESG-Related and Net Zero Collaborations

1. Price-Fixing: Agreements among competitors to set prices for "green" products or services are per se illegal, regardless of intent or environmental benefit.
2. Market Allocation and Output Restrictions: Dividing markets or customers or collectively limiting production (e.g., capping fossil fuel purchases) is strictly prohibited.
3. Group Boycotts: Joint refusals to deal with specific firms or industries (e.g., manufacturers of plastics) may be challenged as unlawful group boycotts.
4. Information-Sharing: Exchanging competitively sensitive information (future pricing, production plans) can facilitate collusion and is risky, even absent an explicit agreement.
5. Standard-Setting: Industry-wide standards are permissible only if the process is open, transparent and non-exclusionary. Exclusionary or restrictive standards may violate antitrust law.
6. Mergers and Acquisitions: Transactions that enhance market power are likely targets of antitrust scrutiny, even if that power is used in furtherance of benign social objectives.

Defensive Strategies and Best Practices

• Transparency and Voluntary Participation: To reduce the risk of antitrust scrutiny, companies should ensure that participation in ESG-related initiatives or net zero alliances is voluntary and nonbinding, explicitly allowing each participant the freedom to adopt, exceed or deviate from the core principles or standards as appropriate. Violations of Section 1 of the Sherman Act require an agreement or a conscious commitment to a common scheme; nonbinding principles open to unilateral adoption or rejection by participants are most likely to avoid potential antitrust exposure. Participation should be open to all qualified market participants on reasonable, nondiscriminatory terms, and the criteria for participation should be transparent and objectively defined. Where feasible, administration by an independent third party may further reduce the risk of being accused of exclusionary conduct.
• Procompetitive Justifications: A central defense under U.S. antitrust law is that the challenged agreement and restriction on competition is reasonably necessary to achieve benign, procompetitive objectives that could not be accomplished through unilateral action, such as offering new products or services, expanding markets, or encouraging innovation. In the context of voluntary sustainability alliances, companies may argue that collaborative action is necessary to achieve procompetitive goals (e.g., improve efficient energy use, develop new green technologies) that benefit consumers and society at large. However, these justifications must be substantiated with credible evidence, and the agreement must be no broader than reasonably necessary to achieve the stated objectives.
• Ongoing Compliance: Companies should regularly review and update agreements in light of evolving legal standards and regulatory guidance. They should maintain thorough documentation of decision-making processes, justifications and compliance efforts.

Practical Considerations for Companies

In practice, companies should:

• Participate only in voluntary organizations that recognize explicitly that principles are nonbinding and to be adopted or rejected through each participant's unilateral decisions.
• Avoid agreements that directly fix prices, allocate markets, or impose output restrictions.
• Ensure that any information-sharing is limited, aggregated and not competitively sensitive.
• Structure standard-setting and certification programs to be open, transparent and non-exclusionary.
• Document the procompetitive justifications and anticipated consumer benefits.
• Monitor ongoing compliance and periodically review the agreement in light of evolving legal standards.

By proactively addressing these considerations, companies can strengthen their defenses against antitrust challenges and demonstrate a good-faith commitment to both competition and sustainability objectives.

Conclusion

The landscape for ESG and sustainability collaborations is rapidly evolving. U.S. authorities remain vigilant, and the risk of enforcement is heightened where conduct resembles traditional antitrust violations. Companies should consider antitrust implications of participating in voluntary sustainability alliances, implement robust compliance protocols and stay informed of regulatory developments in all relevant jurisdictions. Early legal review and careful structuring of ESG and net zero initiatives are essential to mitigate risk and advance sustainability goals lawfully.

Holland & Knight Summer Associate Camryn Towle also contributed to this alert.

Notes

¹ The DOJ had launched a similar investigation into several major automakers and the state of California in 2019, which it subsequently closed taking without any enforcement action.