In this week’s edition of Economy and Society:
- Federal government weighs in on Texas antitrust suit against Big Three
- Republican financial officers ask SEC to investigate Chinese company compliance
- ESG legislation update
- Shareholder proposal numbers fall
- PepsiCo delays environmental goals
- Daily Signal editor argues against Southern Poverty Law Center claims
In Washington, D.C.
Federal government weighs in on Texas antitrust suit against Big Three
What’s the story?
The U.S. Department of Justice and Federal Trade Commission filed a statement of interest last week in an 11-state, Texas-led lawsuit alleging BlackRock, State Street, and Vanguard colluded to suppress coal production, violating antitrust laws. The statement argued ESG-related coordination among asset managers could raise valid antitrust concerns.
Why does it matter?
Republican-led, energy-producing states like Texas have long targeted the Big Three over ESG. But the federal government’s statement of interest marks its first formal move supporting scrutiny of ESG-related collaboration on antitrust grounds.
What’s the background?
For more on the lawsuit, click here.
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According to The Wall Street Journal:
Large institutional investors who own shares in rival companies risk violating antitrust laws if they use their influence to affect how those businesses compete, U.S. antitrust enforcers argued Thursday for the first time.
The Justice Department and Federal Trade Commission made those views public by submitting a brief in a case filed last year by Texas Attorney General Ken Paxton and other Republicans against BlackRock, State Street and Vanguard Group. The federal government’s filing, known as a statement of interest, says the asset managers’ holdings of multiple companies in the coal industry—known as common ownership—could violate competition laws. …
The Republican states’ lawsuit alleges BlackRock, State Street and Vanguard undermined competition in the coal industry by advancing a climate-change agenda on the companies. The asset managers last year collectively owned between 8% and 34% of publicly traded coal companies’ shares, the suit says. The coal companies produce nearly half of all U.S. coal, according to the Justice Department and FTC’s filing.
In the states
Republican financial officers ask SEC to investigate Chinese company compliance
What’s the story?
Twenty-three financial officers from 21 states sent a letter to Securities and Exchange Commission (SEC) Chairman Paul Atkins last week, asking him to investigate Chinese companies listed on U.S. stock exchanges for potential violations of transparency and reporting rules.
Why does it matter?
ESG critics argue that environmental and social standards are strictly enforced against U.S. companies but not Chinese firms. The letter asks the SEC to investigate this perceived double standard and delist noncompliant Chinese companies if warranted.
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According to The Financial Times:
“China’s actions create an environment ripe for fraud and abuse, increasing the likelihood that China-based US-listed companies will violate the disclosure, auditing or anti-fraud provisions of the Securities Exchange Act,” the officers from states including Pennsylvania, South Carolina and Arizona said in the letter obtained by the Financial Times….
The officers said the SEC had the authority to delist firms that did not comply with the Securities Exchange Act or relied on auditors in countries where the US Public Company Accounting Oversight Board could not carry out effective inspections.
They noted, for example, that the Chinese Communist party had cracked down on the ability of foreign firms to conduct due diligence on Chinese companies and allowed the use of opaque structures known as variable interest entity arrangements to help “circumvent US regulatory scrutiny”.
ESG legislation update
Seven state legislatures took action on 16 ESG-related bills last week (since May 20). Six crossed over from one chamber to another.
States with legislative activity on ESG last week are highlighted in the map below. Click here to see the details of each bill in the legislation tracker.
On Wall Street and in the private sector
Shareholder proposal numbers fall
What’s the story?
New analysis from the Harvard Law School Forum on Corporate Governance shows shareholder proposals are down at this point in the proxy season—from 906 in 2024 to 782 in 2025. Environmental proposals dropped from 142 to 115, and social proposals fell from 318 to 209 year-over-year. Anti-ESG proposals rose from 102 to 122.
Why does it matter?
The decline in ESG shareholder proposals—along with a rise in withdrawals before reaching proxy ballots—may suggest ESG supporters are shifting from public pressure to private engagement strategies.
What’s the background?
For more on activists’ preference for engagement, click here.
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According to The Harvard Law School Forum on Corporate Governance:
Following a notable increase in proposal submissions in 2022, the total volume decreased significantly, driven by a sharp decline in proposals related to environmental- or social-related issues. The limited success of such proposals in recent years, improvements in corporate disclosure, and increased political pushback contributed to the drop in submissions.
Omitted proposals have increased dramatically to about 25%, likely as a result of the SEC’s Staff Legal Bulletin No. 14M (CF), which places the onus on proponents to demonstrate that the issue at hand is significant and economically relevant to the company. …
Despite the significant decline in environmental proposals going to a vote, resolutions related to GHG emissions remain a top proposal on ballot. The majority of these request enhanced disclosure, primarily asking companies to report on GHG emissions, publish a climate transition plan, or disclose the progress on established GHG emission reduction strategies.
PepsiCo delays environmental goals
What’s the story?
PepsiCo announced it is pushing back its net-zero greenhouse gas emissions target from 2040 to 2050 as part of a broader update to its sustainability goals.
Why does it matter?
PepsiCo’s decision to push its net-zero emissions goal from 2040 to 2050 joins a broader trend of major companies delaying climate targets. Firms like HSBC and UBS have made similar moves, citing slow supply chain decarbonization and economic headwinds.
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According to ESG Today:
Specifically, PepsiCo said that the changes reflect the company’s understanding about “where progress will take more time, based on the realities of key global enablers such as recycling and reuse infrastructure, electric grid modernization, electric vehicle charging infrastructure and cost-competitive vehicle availability, and varying and changing government approaches.” …
In addition to pushing back its net zero goal, PepsiCo also adjusted other key climate targets, including changing its goal to reduce Scope 1 and 2 emissions by 75% by 2030 on a 2015 basis to a new goal of a 50% reduction on a 2022 basis, and its interim Scope 3 targets from reducing Energy & Industry (E&I) emissions by 40% and Forests, Land, and Agriculture (FLAG) by 40% by 2030 on a 2015 basis to 42% and 30%, respectively, on a 2022 basis. …
On the packaging front, PepsiCo said that it was changing its goal to reduce absolute tonnage of virgin plastic derived from non-renewable sources by 20% by 2030 to a new target to achieve an average of 2% year-over-year reduction in absolute tonnage of virgin plastics through 2030, with a new focus on primary plastic packaging in key packaging markets. The company also updated its goal to use 50% recycled content in plastic packaging to a target to use 40% or greater recycled content by 2035, also with a focus on primary plastic packaging in key markets. The company also said that it is retiring its aim to deliver 20% of all beverage servings it sells through reusable models by 2030, but will continue efforts on reuse as part of its larger goal to achieve 97% reusable, recyclable or compostable packaging by design by 2030 in primary and secondary markets. Notably, the packaging changes follow similar moves announced late last year by Coca-Cola.
In the spotlight
Daily Signal editor argues against Southern Poverty Law Center claims
What’s the story?
Tyler O’Neil, a senior editor at The Daily Signal, wrote a column May 25 criticizing the Southern Poverty Law Center’s portrayal of Christian investment advisor Jerry Bowyer and the Alliance Defending Freedom’s Viewpoint Diversity Score initiative. O’Neil argued that the SPLC inaccurately described Bowyer’s religious background and investment goals.
Why does it matter?
According to O’Neil, the SPLC’s piece reflects a broader pattern of casting religiously motivated initiatives—particularly those from conservative groups—as forms of ideological extremism.
What’s the background?
O’Neil is also the author of Making Hate Pay: The Corruption of the Southern Poverty Law Center. Jerry Bowyer founded Bowyer Research, a financial research company that developed ESG-skeptic proxy voting guidelines, which are used by Institutional Shareholder Services (the largest proxy advisory service in the world).
Read more
According to O’Neil:
You see, the Christian conservative law firm Alliance Defending Freedom has launched an initiative called the Viewpoint Diversity Score, working with Christian investment manager Jerry Bowyer. Bowyer’s firm, Bowyer Research, says it is “nonpolitical” and advises companies to focus “narrowly on pecuniary benefit to investors.”
In recent years, left-leaning firms have prioritized environmental, social, and governance standards for investing, and Alliance Defending Freedom and Bowyer say they want to move investing back to neutral. Their statements, actions, and guidelines seem to promote neutrality, encouraging companies to prioritize profits and returns on investments rather than activist causes. Yet Cravens has discovered their secret….
For instance, when Bowyer wrote that “Biblically Responsible Investing, aka Christian Investing, means investing to get a return,” Cravens insists he really means he wants investment to produce “a lucrative return that can be used to encourage the development of a Christian theocracy.”