On September 13, Tennessee Attorney General (AG) Jonathan Skrmetti sent a letter to members of the Net Zero Financial Service Providers Alliance (NZFSPA) warning that their commitment to support “global net zero greenhouse gas emissions by 2050 or sooner” may violate state and federal law. Specifically, Skrmetti — and the 22 AGs who co-signed his letter — expressed “concerns” that NZFSPA’s commitments “may run afoul of” federal antitrust and state consumer protection statutes. The AGs request that NZFSPA members respond by October 13, providing detailed information regarding their “commitments and related policies.”

NZFSPA is a multinational group comprised of index providers, auditors, stock exchanges, as well as research, rating, and data providers, including some of the largest financial service providers in the world like Bloomberg, Deloitte, EY, KPMG, and MSCI. These member-entities have signed onto NZFSPA’s “commitment” to “help deliver the goals of the Paris Agreement” and “support the goal of net zero greenhouse gas emissions by 2050 or sooner.” The signatories pledge to align their services and products with achieving these goals, set interim targets, engage with stakeholders and policymakers, and publicly report on their progress. Notably, the signatories also pledge to “contribute to Glasgow Financial Alliance for Net Zero (GFANZ) efforts” and “work in coordination with … the Net Zero Bankers Alliance” — both of which have already come under AG scrutiny.[1]

According to the AGs, the companies’ commitment may be unlawful in multiple respects. First, because many NZFSPA members are direct competitors in the financial services market, their commitment could violate federal antitrust law, which generally prohibits competitors from taking concerted action in restraint of trade or commerce, and bars agreements not to do business with certain individuals or businesses. Second, the NZFSPA commitment could violate state consumer protection statutes that broadly empower AGs to investigate unfair or deceptive acts or practices in trade or commerce (UDAP laws). The AGs are concerned that the NZFSPA members’ out-sized market influence could force other companies to comply with their policy preferences and to stop doing business with companies that do not meet NZFSPA standards — particularly those in the energy sector — potentially amounting to a boycott of fossil fuel industries. The AGs also believe that the commitment could harm consumers by artificially restricting the supply of goods and services and inhibiting innovation. Further, the AGs state that the signatories may be misleading consumers about the viability of their “activist climate agenda” and violating consumers’ expectations of “objective and independent[]” financial services.

Why It Matters

The AGs’ letter demonstrates that financial services companies should cautiously approach the decision of whether to join organizations committing such companies to work toward net-zero carbon emissions. Service providers who are already members of such organizations should familiarize themselves with antitrust laws, consumer protection statutes, and regulations to avoid violating any applicable consumer reporting requirements.

[1] See https://www.regulatoryoversight.com/2022/10/texas-ag-joins-wave-of-investigations-into-credit-ratings-companies-esg-data-usage-in-financial-decision-making/; https://www.regulatoryoversight.com/2022/11/banking-group-sues-kentucky-ag-daniel-cameron-over-esg-investigation/.

Troutman Pepper State Attorneys General Team

Ashley Taylor – Co-leader and Firm Vice Chair
Ashley is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice. He focuses primarily on federal and state government regulatory and enforcement matters involving state attorneys general, the Consumer Financial Protection Bureau (CFPB), and the Federal Trade Commission (FTC). Drawing upon his experience as a deputy attorney general, Ashley has developed an extensive consumer practice with regard to the consumer financial services industry.
Clay Friedman – Co-leader
Clay is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice. Informed by nearly a decade in a state attorneys general office, and more than 25 years in private practice, Clay spends much of his time representing clients in singular or multistate regulatory actions. Clay has repeatedly led teams before all 50 state attorneys general and also handles matters with the Federal Trade Commission, the Consumer Financial Protection Bureau, and other local, state and federal agencies.
Judy Jagdmann
Judy is a partner in the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) practice, based in the Richmond office. She brings experience serving as chair and commissioner of the Virginia State Corporate Commission (VSCC) from 2006 through 2022, which includes regulating the utilities, insurance, banking, and securities industries. She also served as Virginia’s attorney general from 2005-2006.
Stephen Piepgrass
Stephen represents clients interacting with, and being investigated by, state attorneys general and other enforcement bodies, including the CFPB and FTC, as well as clients involved with litigation, particularly in heavily regulated industries.
Avi Schick
A former deputy attorney general of New York, Avi applies his experience in bet-the-company matters, representing clients in criminal and civil investigations and enforcement actions before state and federal regulators, prosecutors and enforcement agencies.
Michael Yaghi
Michael handles high-profile state attorneys general, FTC, and CFPB investigations by advising clients through these complex government inquiries. He assists clients through the entire life cycle of investigations, from regulatory enforcement through formal litigation.
Ketan Bhirud
As a former government official at the state and federal level, Ketan leverages extensive experience in the public and private sectors to skillfully represent client interests.
Tim Bado
Tim is an attorney in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, with a primary focus on financial services litigation.
Chris Carlson
Chris represents clients in regulatory, civil and criminal investigations and litigation. In his practice, Chris regularly employs his prior regulatory experience to benefit clients who are interacting with and being investigated by state attorneys general.
Natalia Jacobo
Natalia is an associate in the firm’s business litigation practice. She recently received her J.D from the University of California, Davis School of Law.
Namrata Kang
Namrata is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. Her work includes advising clients in regulatory investigations and compliance matters, in addition to representing clients in civil litigation matters.
Michael Lafleur
Michael is an associate in the firm’s Regulatory Investigations, Strategy, and Enforcement Practice Group. Based out of the firm’s Boston office, Mike has deep experience in litigation, investigations, and other regulatory matters involving state-level regulators and state attorneys general.
Susan Nikdel
Susan is an associate in the firm’s Consumer Financial Services Practice Group, and focuses her practice on consumer financial services matters. She has defended several of the nation’s largest and most influential financial institutions in individual and class action litigation involving the Telephone Consumer Protection Act (TCPA), Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), and other consumer privacy statutes. Susan also represents banks, fintechs, and financial services companies in connection with regulatory examinations and investigations brought by the CFPB, state attorneys general, and the California Department of Financial Protection and Innovation.
John Sample
John represents clients in a wide variety of general and complex litigation matters, shareholder disputes, products liability, and privacy claims.
Whitney Shephard
Whitney is an attorney in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. She represents clients facing state and federal regulatory investigations and enforcement actions, as well as related civil litigation.
Trey Smith
Trey is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement practice. His experience includes serving as a summer associate at the firm in 2021.
Daniel Waltz
An experienced litigator, Daniel advises and represents regional, national and international companies, financial institutions and insurers in all facets of business, complex commercial and insurance coverage litigation. He is committed to working with his clients to find creative solutions to meet their needs.
Stephanie Kozol
Stephanie is Troutman Pepper’s senior government relations manager in the state attorneys general department.