Critics Say Treasury Net Zero Principles Encourage Bank Collusion, Violate Antitrust Laws
Critics argue it is dangerous to push such an industry, which is already consolidating around a few powerful players, to act in unison for political goals.
Janet Yellen, secretary of the U.S. Treasury, speaks onstage during The Bloomberg Transition Finance Action Forum at The Plaza Hotel in New York on Sept. 19, 2023. (Bryan Bedder/Getty Images for Bloomberg Philanthropies)
The U.S. Treasury Department this week announced its “Principles for Net Zero Financing & Investment,” which pushes banks, insurance companies, and asset managers to unite behind U.N. climate goals.
This latest Biden administration initiative against the fossil fuel industry comes at a time when many state officials have been pushing back against the environmental, social and governance (ESG) agenda, including boycotts of ESG banks and fund managers, as well as potential antitrust actions from state attorneys general.
The principles, issued on Sept. 19, state that “Treasury and the Biden-Harris Administration welcome robust net-zero commitments made by financial institutions. Treasury hopes financial institutions will use the Principles to support the implementation of their commitments.”
According to a statement by Treasury Secretary Janet Yellen, the principles “establish that financial institution net-zero commitments should be in line with limiting the increase in the global average temperature to 1.5 degrees Celsius. They affirm that financial institutions that have made these commitments should develop transition plans with clear practices, targets, and metrics.”
These principles, which the Treasury Department says are “voluntary,” direct banks, insurance companies and asset managers to focus particularly on “Scope 3” greenhouse gas (GHG) emissions. Scope 3 entails those emissions from a company’s customers and clients.
‘Heavy-Handed Net Zero Guidance’
Critics have raised red flags about this new initiative, arguing that it is dangerous to push an industry, which is already consolidating around a few powerful players, to act in unison for political goals.
“The administration’s heavy-handed net zero guidance combines agency overreach with collusion between transnational financial giants, and appears intended to insulate our energy policy from any degree of accountability to the people or our elected representatives,” Tennessee Attorney General Jonathan Skrmetti told The Epoch Times.
Mr. Skrmetti recently led a coalition of 22 state attorneys general, who penned a letter to members of the Net Zero Financial Service Providers Alliance (NZFSPA), one of several U.N.-sponsored net zero clubs.
The letter stated: “both federal and state law broadly prohibit business competitors from engaging in concerted action in restraint of trade or commerce. Accordingly, collective agreements to ‘restrict production, sales, or output’ are almost always illegal.”
Robert Bork, Jr., president of the Antitrust Education Project, also voiced his concerns.
“This U.S. Treasury document encourages the network of powerful investment companies and NGOs to violate antitrust law with government support. It encourages a restraint of trade, a form of collusion outlawed by the Sherman Antitrust Act,” Mr. Bork told The Epoch Times.
Ms. Yellen has argued that the move by Treasury to unify financial institutions behind the net zero movement was necessary.
“The physical impacts of climate change are impossible to ignore. We’ve seen record-breaking heatwaves that have led to a tragic spike in heat-related deaths and hospitalizations,” she said on Sept. 19.
“Unprecedented storms and wildfires are destroying homes and undermining livelihoods. Vulnerable populations globally are disproportionately affected because of where they live and the industries in which they work, and low-income Americans are no exception.”
Janet Yellen, Secretary of the U.S. Treasury and U.N. Special Envoy on Climate Ambition and Solutions and co-chair, Glasgow Financial Alliance for Net Zero Michael R. Bloomberg onstage during The Bloomberg Transition Finance Action Forum at The Plaza Hotel in New York City on Sept. 19, 2023. (Bryan Bedder/Getty Images for Bloomberg Philanthropies)
But some are skeptical that this move would benefit the environment.
“I think we have to remember what this is all about,” Utah State Treasurer Marlo Oaks told The Epoch Times.
“We’re really talking about the free market system versus centralized planning, with climate as a pretext.
“I see this as another step in this administration’s effort to undermine our economic system, to push financial institutions in the direction of centralized planning, and it is ultimately not about the climate,” Mr. Oaks said.
“If we are concerned about climate change, then we we should be promoting our free market system, because that’s where innovation comes from, that’s where we solve problems.”
In addition, despite claims that climate change is making the earth more dangerous, data shows that natural disasters like hurricanes, wildfires, droughts and tornados are not getting worse, although property damages may be increasing in nominal terms because more expensive properties exist today in vulnerable areas like coastlines. Deaths from extreme weather are also steadily declining and are down more than 90 percent from a century ago.
And what Ms. Yellen may have overlooked when she mentioned an increase in heat-related deaths is that deaths from cold, which kill far more people than heat, are down.
Congress, Investors and Consumers
West Virginia State Treasurer Riley Moore was also critical of the move by Treasury, charging that it circumvents the democratic process.
“This is yet another attempt by the Biden administration to use command-and-control central planning tactics to implement the Green New Deal policies that have been repeatedly rebuked by Congress,” he stated.
Climate change activists hold signs while taking part in a climate protest in Los Angeles on May 24, 2019. (Frederic J. Brown/AFP via Getty Images)
Others have raised concerns that the principles are an effort to politicize finance, which may violate the fiduciary duties that companies have to investors.
“This document encourages fiduciaries to ignore their legal responsibility to the investor to produce the highest possible return,” Mr. Bork said.
“In the last five years, global ESG funds have underperformed the broader market 6.3 percent to 8.9 percent. Yet Treasury now gives official sanction to the politicization of the investments of millions of American retirees and state pension funds.
“If you believe in passing laws that restrict fossil fuels, fine. But this Rube Goldberg, backdoor attempt to restrict the use of fossil fuels by punishing investors is illegal and it is actively harming millions of Americans.”
Some critics have charged that this effort will harm consumers, driving up the cost of gasoline, electricity, and even food.
“This announcement from the Department of the Treasury forcing financial institutions to adopt net-zero principles should come as no surprise to American consumers as the Biden administration openly declares war on consumers,” Will Hild, executive director of Consumers’ Research, stated.
“Treasury Secretary Yellen, with her announcement of these new net-zero principals at the Bloom Transition Finance Action Forum, has made it abundantly clear that the Treasury Department is working with and for ESG activists like Michael Bloomberg to make the Glasgow Financial Alliance for Net Zero (GFANZ) goals for financial institutions into U.S. government policy.”
Ultimately, the goals of the net zero movement, if they are met, will likely entail a significant reduction in Americans’ living standards, critics say.
“It’s sad that when consumers are facing skyrocketing gas and electricity prices, this administration’s solution is to double-down on the failed policies that have driven the rampant inflation of recent years,” Mr. Moore said.
“They’re looking at reducing airline travel; they want to push us into mass transit; there’s a push to reduce red meat consumption; the [electricity] grid stability is also a major issue,” Mr. Oaks said.
“I think the flourishing of any economic society, at least in the modern age, is based on cheap, reliable, abundant power and adequate food for everybody, and those are the two industries that seem to be under attack.”
Kevin Stocklin is a business reporter, film producer and former Wall Street banker. He wrote and produced "We All Fall Down: The American Mortgage Crisis," a 2008 documentary on the collapse of the mortgage finance system. His most recent documentary is "The Shadow State," an investigation of the ESG industry.
