A group of Republican state attorneys general sent a letter in May to a United Nations-backed climate coalition, the Net-Zero Insurance Alliance, warning that it could be in violation of U.S. antitrust laws. Within weeks, nearly half of the alliance’s members bolted, leaving the climate project in disarray.
The remarkable and swift collapse of a group whose members included the world’s top insurance companies—collectively holding over $3 trillion in assets—appeared to happen overnight. In reality, it was the result of a sustained, two-year legal battle led by Republican attorneys general across the United States who mounted one of the most effective challenges yet to the Environmental, Social and Corporate Governance (ESG) movement.
The turmoil at the Insurance Alliance followed investigations launched by state attorneys general into two other UN-backed industry coalitions, the Net Zero Asset Managers Initiative and the Net Zero Bankers Alliance. Those alliances, founded in 2020 and 2021 respectively, aim to "accelerate [the] transition to a net-zero emissions economy" by pushing members to reduce investments in, as well as loans and insurance coverage to, high-emissions industries.
Such a coordinated campaign raised legal issues because its published target requirements are specific and its members control large market shares of their industries, according to Peter Bisbee, the executive director of the Republican Attorneys General Association. "The major fault with everyone in these Net Zero groups is it became very calculative," he said. "You could see exactly what they were doing and how they were doing it, and a lot of companies were putting out very mathematical language of how they were going to achieve these targets."
In the May letter, 23 state attorneys general warned the Insurance Alliance that it could be in breach of federal antitrust laws and their state equivalents that prohibit "agreements among competitors to issue uniform pricing policies, conditions of sale, production quotas, or otherwise limit the identity of their customers if those agreements will ultimately raise prices."
"The push to force insurance companies and their clients to rapidly reduce their emissions has led not only to increased insurance costs, but also to high gas prices and higher costs for products and services across the board," the officials wrote, adding that the group appeared to be targeting specific industries, including oil, gas, coal, and transportation.
Members of the Net Zero Insurance Alliance had already raised concerns about the coalition’s explicit target goals. Munich Re, an insurance company that dropped out in March, left citing "material antitrust risks." And at least 14 others firms fled the coalition after receiving the May letter, including the $1 trillion insurance behemoth Allianz, Lloyd’s, Tokio Marine Holdings, and Samsung Fire & Marine Insurance. Just 16 members remain.
The United Nations Environmental Program is standing by the Insurance Alliance’s work. The group said in a statement that it "reaffirms its conviction ever since it initiated, convened, and launched the Net-Zero Insurance Alliance—that in order to successfully tackle the climate emergency, there is a fundamental and urgent need for collaboration, not just individual action."
Bisbee said the insurers were likely concerned they could face investigations like the ones into the Net Zero Asset Manager and Banking alliances. "The whole alliance started to collapse. It did not take a formal investigation," said Bisbee. "The insurers just simply started fleeing."
Louisiana attorney general Jeff Landry, who organized the letter with his Utah counterpart Sean Reyes, told the Free Beacon he is "concerned the Net Zero Insurance Alliance is stifling competition in Louisiana and driving up insurance costs for our consumers." He is "investigating if their actions violate our antitrust and consumer protection laws," he said.
The investigations into both the investment and banking-focused Net Zero groups are intensifying. In November, multiple state attorneys general asked the Federal Energy Regulatory Commission to investigate Vanguard, one of the world’s largest investment firms, for its involvement in the Net Zero Asset Managers Initiative. The company dropped out of the coalition shortly thereafter, a move that made national headlines. A steering committee of state attorneys general has also been investigating the initiative for potential antitrust violations, and is expected to move to litigation within the year, a source familiar with the probe told the Free Beacon.
In October, over a dozen attorneys general issued subpoenas to major U.S. banks involved in the Net Zero Bankers Alliance, including Bank of America.
"Collusion between companies to limit the choices available to consumers has been a concern of AG offices for over a century," Tennessee attorney general Jonathan Skrmetti told the Free Beacon. "When industry participants band together to enact policy through their financial leverage, that oligarchical conduct runs afoul of both our antitrust laws and our republican form of government."
Montana attorney general Austin Knudsen, who sent a warning to major financial firms involved in the Net Zero Asset Managers Initiative in March, told the Free Beacon that Net Zero groups are a way for activists to use corporations to "surreptitiously push political and social goals they couldn’t accomplish through our democratic processes."
"Through their coordination to reach specific outcomes instead of maximizing shareholder value, banks, insurers, and asset managers who participate in these coalitions are potentially violating antitrust and consumer protection laws in Montana and numerous other states," he said.
While antitrust cases are often settled out of court, Bisbee said he doesn’t expect state attorneys general to compromise if it moves to litigation.
"This path that the AGs are on is one where I firmly believe they are going to try to end the practice altogether," Bisbee said.