GOP investigates whether left-leaning 'ESG' goals have infected the Federal Trade Commission
Lawmakers say there is already evidence the FTC is using ESG as a factor in merger reviews
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EXCLUSIVE – House Republicans are asking the Federal Trade Commission (FTC) to explain a new policy that they worry might be giving weight to environmental, social, governance (ESG) priorities as it reviews corporate mergers, which the lawmakers fear could harm consumers and is "leaving room for the government to use them as a guise to implement partisan social priorities."
In a Tuesday letter reviewed exclusively by Fox News Digital, Rep. Scott Fitzgerald, R-Wis., and 11 of his Republican colleagues in the House wrote to FTC Chairwomen Lina Khan over her decision to repeal Trump-era guidance on merger reviews and replace it with a "broader, more amorphous policy" the lawmakers say could be a loophole to prioritize ESG considerations.
"This shift towards a vague and potentially political enforcement policy raises concerns that the FTC will add ESG issues to merger inquiries, especially since the FTC has asked about these issues in the past," the lawmakers wrote. "It also raises the question whether the FTC will faithfully enforce the antitrust laws when companies illegally collude to push ESG-related initiatives."
The FTC enforces consumer protection and antitrust laws and oversees mergers to protect against anti-competitive activity. However, the lawmakers wrote they might already be seeing signs that ESG is a factor in the FTC's work.
WHAT IS ESG? INVESTING WITH ENVIRONMENTAL, SOCIAL AND GOVERNANCE IN MIND
On Tuesday, Rep. Scott Fitzgerald, R-Wis., wrote to FTC Chairwoman Lina Khan, questioning the agency's ESG policies. (Photo by Saul Loeb-Pool/Getty Images / Getty Images)
They said a report in 2021 indicated that "merging companies reported inquiries from the FTC requesting information outside the traditional scope of whether consumers have been harmed, including how a deal would affect ESG issues."
Since the 1980's, the FTC used a "consumer welfare standard" in reviewing mergers that make consumer benefit a significant factor in merger approval decisions. Lawmakers wrote that adding ESG factors might allow the FTC to drift from that mission.
"Adding ESG issues to merger inquiries simply creates confusion, as there are no objective standards or metrics to measure ESG, leaving room for the government to use them as a guise to implement partisan social priorities, or ignore enforcement where collusion occurs in the name of politically favored goals," they wrote.
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They also warned that adopting ESG as a priority could prompt the FTC to turn a blind eye to corporate collusion on ESG practices that harm consumers. "As we see activists pushing large corporations to weaponize ESG initiatives to reshape society in ways that lack the support necessary to pass through legislation, we are concerned about collusive efforts that could restrict politically disfavored activity in ways that increase prices for consumers," they wrote.
In recent months, Republicans have been fighting a Wall Street push to prioritize ESG in investment decisions. Most recently, the Florida State Treasury divested $2 billion from investment giant BlackRock because of its ESG policies.
Rep. Scott Fitzgerald, R-Wis., led the Tuesday letter that says FTC's new policies call into question whether the agency will faithfully enforce antitrust laws. (AP)
The lawmakers cited an executive order from President Biden on competition, which they claim "raises more concerns that using ESG criteria as a political tool has spread to other regulators such as the Federal Deposit Insurance Corporation or the Securities & Exchange Commission."
"For example, recent reports indicate that the liberal think tank, Center for American Progress, recommended the SEC incorporate market power indicators, such as labor cost metrics and investment calculations, into ESG disclosures," they wrote.
In an interview with Fox News Digital, Rep. Fitzgerald said asking Khan to testify before the House "raise the profile" of the ESG push from the Biden administration is "absolutely" something the new Republican majority is considering once they take over in January.
Rep. Scott Fitzgerald says requesting Lina Khan's testimony is "absolutely" something the Republican-majority House will consider. (Reuters)
The lawmakers asked the FTC provide all ESG-related communications on merger investigations or between staff of the White House Competition Council, and any plans or proposals related to the FTC’s decision to make inquires related to ESG issues in merger enforcement.
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The agency has deadline of Dec. 19 to respond.