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 co-leader of the firm’s nationally ranked State Attorneys General practice, vice chair of the firm, and a partner in its Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He helps his clients navigate the complexities involved with multistate attorneys general investigations and enforcement actions, federal agency actions, and accompanying litigation.
	Clay Friedman – Co-leader Clayton is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice, multidisciplinary teams with decades of experience crafting effective strategies to help deter or mitigate the risk of enforcement actions and litigation.
	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 leads the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He focuses his practice on enforcement actions, investigations, and litigation. Stephen primarily represents clients engaging with, or being investigated by, state attorneys general and other state or local governmental enforcement bodies, including the CFPB and FTC, as well as clients involved with litigation, with a particular focus on 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 is a partner in the firm’s State Attorneys General and Regulatory Investigations, Strategy + Enforcement (RISE) Practice Groups, nationwide teams that advise clients on consumer protection enforcement matters and other regulatory issues.
	Tim Bado Tim is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, where he represents corporations and individuals facing potential civil and criminal exposure. Tim’s experience in government investigations, enforcement actions, and white-collar litigation spans a number of industries, including financial services, pharmaceutical, health care, and government contracting, among others.
	Chris Carlson Chris Carlson 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 Regulatory Investigations, Strategy and Enforcement (RISE) practice. She focuses her practice on two primary areas: government contracting and state attorney general work.
	Namrata Kang Namrata (Nam) is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. She routinely advises clients on a wide variety of state and federal regulatory matters, with a particular emphasis on state consumer protection laws relating to consumer financial services and marketing and advertising.
	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.
	John Sample John is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He focuses his practice on a wide range of general and complex litigation matters, including shareholder disputes, fraud, products liability, breach of contract, and Biometric Information Privacy Act claims.
	Whitney Shephard Whitney is an associate 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. He focuses his practice on helping financial institutions and consumer facing companies navigate regulatory investigations and resulting litigation.
	Daniel Waltz Daniel is a member of the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and State Attorneys General team. He counsels clients in connection with navigating complex government investigations, regulatory compliance, and transactions, involving state and federal government contracting obligations. Drawing on his broad experience as a former assistant attorney general for the state of Illinois, Daniel is a problem solver both inside and outside the courtroom.
	Stephanie Kozol Stephanie is Troutman Pepper’s senior government relations manager in the state attorneys general department.