SALT LAKE CITY, UTAH – In a letter signed by 16 additional states to Climate Action 100+ (CA100+) members, Utah Attorney General Sean D. Reyes reiterated legal concerns over association with the organization as it shifts to Phase 2. The multi-state warning notifies the members to immediately evaluate the lawfulness of the radical CA100+ agenda to “take action” in using investor money to pressure companies “to reduce greenhouse gas emissions across the value chain” in line with the Paris Agreement goals. The letter also points out that the world’s largest asset managers are leaving CA100+ because of legal risks previously identified by state attorneys general and that Phase 2 heightens legal concerns.
“Over the last several years, legal concerns have risen exponentially as a result of the radical agenda and seemingly extortive practices of Climate Action 100+. Although environmental stewardship is critically important to our states and constituents, CA100’s extreme, unrealistic, and legally suspect ESG mandates will continue to be scrutinized and challenged by the State of Utah and at least 16 other states,” said General Reyes. “The fact that many of the world’s largest asset managers are leaving CA100 due to legal risks of membership is simply the beginning of what we will see as more of the organization’s liability and practices are exposed.”
In the letter, the States argue that leading asset managers have belatedly recognized the legal risk of CA100+ commitments. J.P. Morgan Asset Management, State Street Global Advisors, PIMCO, and Invesco all recently announced their withdrawal from CA100+. In addition, BlackRock announced that it will limit involvement with CA100+ to its international arm and will now pursue net-zero goals in engagements and proxy votes only for clients who have expressly asked it to do so.
The States also highlight the conflict between CA100+ membership and at least six different legal duties:
- The fiduciary duty of loyalty requires asset managers to act solely in their client’s financial interests.
- The fiduciary duty of care requires asset managers to provide advice that is in the best interest of their clients, based on the client’s objectives, and to provide advice and monitoring over the course of the relationship.
- Antitrust laws prohibit, among other things, contracts or combinations in restraint of trade.
- Various holding company laws may apply here.
- State laws prohibit deceptive acts or practices towards consumers, as well as making false statements or omitting facts concerning the offer or sale of securities.
- The SEC requires certain information to be filed pursuant to Schedule 13D.
Joining Utah on the letter were the States of Alaska, Arkansas, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, South Carolina, Texas, and Wyoming.
