[co-author: Stephanie Kozol]*
What Happened
On July 28, Florida Attorney General (AG) James Uthmeier announced investigations into two environmental, social, and governance (ESG) scoring organizations for potential violations of state consumer protection and antitrust laws. This investigation is consistent with a continuing trend among Republican AGs to scrutinize entities directly and indirectly involved in encouraging ESG-based initiatives. For example, in the last three years, Republican AGs have targeted the Net-Zero Banking Alliance and the Net-Zero Asset Managers over antitrust and fiduciary duty concerns related to ESG. Membership in both organizations dwindled as a result.
The Details
The Florida AG issued subpoenas to CDP (formerly the Climate Disclosure Project) and Science Based Targets initiative (SBTi), over their climate scoring practices. These organizations facilitate environmental data disclosures, score companies on their environmental approaches, and set general climate standards and tools that help companies align their greenhouse gas emissions with reduction targets. According to the Florida AG, large financial institutions rely on CDP and SBTi’s data to make investment decisions. The Florida AG accuses CDP and SBTi of running a pay-for-play scheme, coercing companies into sharing confidential information and paying for services to improve their environmental scores.
According to the Florida AG’s press release, the investigation will focus on deceptive trade practices and antitrust violations, such as market manipulation and anticompetitive actions.
Why It Matters
This investigation follows a recent increase in scrutiny of ESG-related initiatives by some AGs. Organizations in these areas should recognize potential enforcement risks, especially through state competition laws.
*Senior Government Relations Manager
