[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
CLIMATE CONTROL: DECARBONIZATION
COLLUSION IN ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) INVESTING
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON THE ADMINISTRATIVE STATE, REGULATORY REFORM, AND
ANTITRUST
COMMITTEE ON THE JUDICIARY
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
WEDNESDAY, JUNE 12, 2024
__________
Serial No. 118-84
__________
Printed for the use of the Committee on the Judiciary
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via: http://judiciary.house.gov
_______
U.S. GOVERNMENT PUBLISHING OFFICE
56-095 WASHINGTON : 2024
COMMITTEE ON THE JUDICIARY
JIM JORDAN, Ohio, Chair
DARRELL ISSA, California JERROLD NADLER, New York, Ranking
MATT GAETZ, Florida Member
ANDY BIGGS, Arizona ZOE LOFGREN, California
TOM McCLINTOCK, California SHEILA JACKSON LEE, Texas
TOM TIFFANY, Wisconsin STEVE COHEN, Tennessee
THOMAS MASSIE, Kentucky HENRY C. ``HANK'' JOHNSON, Jr.,
CHIP ROY, Texas Georgia
DAN BISHOP, North Carolina ADAM SCHIFF, California
VICTORIA SPARTZ, Indiana ERIC SWALWELL, California
SCOTT FITZGERALD, Wisconsin TED LIEU, California
CLIFF BENTZ, Oregon PRAMILA JAYAPAL, Washington
BEN CLINE, Virginia J. LUIS CORREA, California
KELLY ARMSTRONG, North Dakota MARY GAY SCANLON, Pennsylvania
LANCE GOODEN, Texas JOE NEGUSE, Colorado
JEFF VAN DREW, New Jersey LUCY McBATH, Georgia
TROY NEHLS, Texas MADELEINE DEAN, Pennsylvania
BARRY MOORE, Alabama VERONICA ESCOBAR, Texas
KEVIN KILEY, California DEBORAH ROSS, North Carolina
HARRIET HAGEMAN, Wyoming CORI BUSH, Missouri
NATHANIEL MORAN, Texas GLENN IVEY, Maryland
LAUREL LEE, Florida BECCA BALINT, Vermont
WESLEY HUNT, Texas
RUSSELL FRY, South Carolina
Vacancy
------
SUBCOMMITTEE ON THE ADMINISTRATIVE STATE,
REGULATORY REFORM, AND ANTITRUST
THOMAS MASSIE, Kentucky, Chair
DARRELL ISSA, California J. LUIS CORREA, California,
MATT GAETZ, Florida Ranking Member
DAN BISHOP, North Carolina HENRY C. ``HANK'' JOHNSON, Jr.,
VICTORIA SPARTZ, Indiana Georgia
SCOTT FITZGERALD, Wisconsin ERIC SWALWELL, California
CLIFF BENTZ, Oregon TED LIEU, California
LANCE GOODEN, Texas PRAMILA JAYAPAL, Washington
JEFF VAN DREW, New Jersey MARY GAY SCANLON, Pennsylvania
BEN CLINE, Virginia JOE NEGUSE, Colorado
HARRIET HAGEMAN, Wyoming LUCY McBATH, Georgia
NATHANIEL MORAN, Texas ZOE LOFGREN, California
KELLY ARMSTRONG, North Dakota STEVE COHEN, Tennessee
Vacancy GLENN IVEY, Maryland
BECCA BALINT, Vermont
CHRISTOPHER HIXON, Majority Staff Director
AARON HILLER, Minority Staff Director & Chief of Staff
C O N T E N T S
----------
Wednesday, June 12, 2024
OPENING STATEMENTS
Page
The Honorable Thomas Massie, Chair of the Subcommittee on the
Administrative State, Regulatory Reform, and Antitrust from the
State of Kentucky.............................................. 1
The Honorable J. Luis Correa, Ranking Member of the Subcommittee
on the Administrative State, Regulatory Reform, and Antitrust
from the State of California................................... 3
The Honorable Jim Jordan, Chair of the Committee on the Judiciary
from the State of Ohio......................................... 6
WITNESSES
Mindy Lubber, Chief Executive Officer and President, Ceres
Oral Testimony................................................. 7
Prepared Testimony............................................. 10
Natasha Lamb, Managing Partner and Chief Investment Officer,
Arjuna Capital
Oral Testimony................................................. 13
Prepared Testimony............................................. 15
Dan Bienvenue, Interim Chief Investment Officer, CalPERS
Oral Testimony................................................. 16
Prepared Testimony............................................. 18
Attorney GeneraL Keith Ellison, Minnesota Attorney General
Oral Testimony................................................. 26
Prepared Testimony............................................. 28
LETTERS, STATEMENTS, ETC. SUBMITTED FOR THE HEARING
All materials submitted for the record by the Subcommittee on the
Administrative State, Regulatory Reform, and Antitrust are
listed below................................................... 69
Materials submitted by the Honorable Honorable J. Luis Correa,
Ranking Member of the Subcommittee on the Administrative State,
Regulatory Reform, and Antitrust from the State of California,
for the record
An Executive Summary entitled, ``2024 Advancing Climate
Solutions,'' Jan. 8, 2024, ExxonMobil
An article entitled, ``Why We're Opposing Divestment in
Senate Bill 252,'' Mar. 30, 2023, Calpers
A document entitled, ``Energy investing: Setting the record
straight,'' 2024, BlackRock
A document entitled, ``Shareholder Rights & Corporate
Disclosure: `Corporate Governance Conference,' '' Mar.
2006, Standard & Poor's
A report entitled, ``Oil and Gas Analytics Market Size to
Reach US$ 50 Billion by 2030,'' Sept. 2021, Vision
Research Reports
A report entitled, ``Trust Level Review: As of December 31,
2023,'' CalPERS
A chart entitled, ``Chart 1: 2024 Oil Market Deficit Should
Keep Prices Elevated.''
A report entitled, ``California Public Employees' Retirement
System Total Fund Investment Policy,'' Sept. 13, 2013,
CalPERS
An article entitled, ``2023: A historic year of U.S. billion-
dollar weather and climate disasters,'' Jan. 8, 2024,
Climate.gov
An article entitled, ``The Soaring Cost Of Climate Change,''
Jul. 10, 2023, Satista
An article entitled, ``Cities ablaze and countries submerged:
The worst climate disasters of 2022,'' Jan. 10, 2023, The
Independent
An Executive Summary entitled, ``ESG and Financial
Performance: Uncovering the Relationship by Aggregating
Evidence from 1,000 Plus Studies Published between 2015-
2020,'' NYU, Center for Sustainable Business
An article entitled, ``How Climate Change Turned Lush Hawaii
Into a Tinderbox,'' Aug. 14, 2023, The New York Times
An article entitled, ``Drought and wind: How Maui's wildfires
turned into a tragedy,'' Aug. 14, 2023, NBC News
An article entitled, ``Energy officials warn of winter
blackout risk in Texas and beyond,'' Dec. 14, 2023, Kut
News
An article entitled, ``Biden releasing 1 million barrels of
gasoline from Northeast reserve in bid to lower prices at
pump,'' May 21, 2024, AP News
A page from the Annual Report entitled, ``United States:
Securities and Exchange Commission,'' Dec. 31, 2023,
Delta Air Lines
An article entitled, `` `Not Sustainable': High Insurance
Costs Threaten Affordable Housing,'' Jun. 10, 2024, The
New York Times
Materials submitted by the Honorable Thomas Massie, Chair of the
Subcommittee on the Administrative State, Regulatory Reform,
and Antitrust from the State of Kentucky, for the record
A shareholder agreement entitled, ``Shareholder Engagement:
January 2021/1st Quarter,'' Arjuna Capital
An Executive Summary entitled, ``Global Sector Strategies:
Investor Actions to Align the Aviation Sector with the
IEA's 1.5 deg.C Decar-
bonization Pathway,'' Mar. 2022, Principles for
Responsible Investment (PRI)
Materials submitted by the Honorable Matt Gaetz, a Member of the
Subcommittee on the Administrative State, Regulatory Reform,
and Antitrust from the State of Florida, for the recod
A document entitled, ``Emerging & Diverse Manager Data
Report,'' Mar. 2013, CalPERS
An article entitled, ``Florida Retirement System notches net
7.5% for fiscal year,'' Sept. 6, 2023,
Pensions&Investments
A document entitled, ``CalPERS Reports Preliminary 5.8%
Investment Return for 2022-23 Fiscal Year,'' Jul. 19,
2023, CalPERS
Materials submitted by the Honorable Harriet Hageman, a Member of
the Subcommittee on the Administrative State, Regulatory
Reform, and Antitrust from the State of Wyoming, for the record
An article from entitled, ``The Moral High Ground,'' Sept. 7,
2011, National Review Online
An article entitled, ``Hawaii Five Uh-Oh! Power Outages in
Paradise,'' Jan. 13, 2024, Energy Bad Boys
Materials submitted by the Honorable Jerrold Nadler, Ranking
Member of the Committee on the Judiciary from the State of New
York, for the record
A letter to Attorney General Merrick Garland and Assistant
Attorney General Jonathan Kanter, Department of Justice,
from the House Judiciary Democrats, Jun. 4, 2024
A document entitled, ``Diversity Matters Even More: The case
for holistic impact,'' Nov. 2023, McKinsey & Company
The first page from the Handbook entitled, ``Climate Action 100+
Signatory Handbook,'' Jun. 2023, Climate Action 100+, submitted
by the Honorable Mary Gay Scanlon, a Member of the Subcommittee
on the Administrative State, Regulatory Reform, and Antitrust
from the State of Pennsylvania, for the record
Materials submitted by the Honorable Henry C. ``Hank'' Johnson,
Jr., a Member of the Subcommittee on the Administrative State,
Regulatory Reform, and Antitrust from the State of Georgia, for
the record
An article entitled, ``Conservatives Have a New Rallying Cry:
Down With ESG,'' Feb. 26, 2023, Wall Street Journal
An article entitled, ``Far-right fossil fuels company allies
pressure US supreme court to shield firms in
unprecedented campaign,'' Jun. 9, 2024, Guardian
An article entitled, ``Dark Money Group Weaponizes State
Treasurers in Attacks,'' Aug. 5, 2022, Documented.net
An article entitled, ``State Attorneys General Join Anti-ESG
Effort, Amid Growing Backlash,'' Jul. 2, 2023,
Documented.net
House Judiciary Democratic Staff Report entitled, ``Unsustainable
and Unoriginal: How the Republicans Borrowed a Bogus Antitrust
Theory to Protect Big Oil,'' Jun. 11, 2024, submitted by the
Honorable Becca Balint, a Member of the Subcommittee on the
Administrative State, Regulatory Reform, and Antitrust from the
State of Vermont, for the record
CLIMATE CONTROL: DECARBONIZATION
COLLUSION IN ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) INVESTING
----------
Wednesday, June 12, 2024
House of Representatives
Subcommittee on the Administrative State,
Regulatory Reform, and Antitrust
Committee on the Judiciary
Washington, DC
The Subcommittee met, pursuant to notice, at 11:54 a.m., in
room 2141, Rayburn House Office Building, the Hon. Thomas
Massie [Chair of the Subcommittee] presiding.
Present: Representatives Massie, Jordan, Issa, Gaetz,
Bishop, Spartz, Fitzgerald, Bentz, Cline, Van Drew, Hageman,
Correa, Nadler, Johnson, Swalwell, Scanlon, Ivey, and Balint.
Mr. Massie. The Subcommittee will come to order.
Without objection, the Chair is authorized to declare a
recess at any time.
We welcome everybody to today's hearing on collusion in ESG
investing. I will now recognize myself for an opening
statement.
The American economy has grown into the strongest in the
world on the foundation of free-market capitalism. That's
because competition results in lower prices and more and better
goods and services for all Americans.
As the legendary economist and Nobel laureate Milton
Friedman explained, quote,
There has never in history been a more effective machine for
eliminating poverty than the free enterprise system and the
free market.
Collusion, on the other hand, raises prices and reduces
both output and consumer choice. Thus, antitrust law aims to
protect competition and prohibit collusion. In fact, the
Supreme Court has described collusion as, quote, ``the supreme
evil of antitrust.''
Despite these longstanding economic and legal principles,
the climate cartel has engaged in anticompetitive collusion to
impose radical environmental, social, and governance, or ESG,
goals on the American people.
In his testimony to this Committee, Andrew Behar
highlighted the three C's of collusion: They are collaborate,
convene, and coordinate. Gee, it's like you wanted to say the
word ``collusion,'' but you didn't say it, so you asked ChatGPT
to give me an alliteration, to go to the thesaurus and find
three words that are like ``collusion'' but not ``collusion.''
These were his words: Collaborate, convene, and coordinate--
with other Members of the climate cartel to impose their
ideological agenda on the American people.
This climate cartel consists of left-wing activists,
dominant financial institutions, and the groups and initiatives
that facilitate the collusion among them. Specifically, groups
like Climate Action 100+ expressly require the investors who
join them to pressure the companies they invest in to, quote,
``decarbonize and reach net-zero emissions.''
Asset owners like California Public Employees' Retirement
System, or CalPERS, and asset managers like Arjuna Capital then
use the investments they control to force companies to disclose
their carbon emissions, to reduce their carbon emissions, and
to adopt governance mechanisms that enforce these commitments,
even though these commitments are bad for investors and
consumers.
The climate cartel engages in a series of escalating
pressure tactics to force American companies to act against
their own self-interests and adopt its desired left-wing
policies.
First, the climate cartel leverages its investment holdings
to demand meetings with corporate management. If corporations
refuse to cave, the climate cartel then escalates to filing
shareholder resolutions demanding that companies take action.
Groups like Climate Action 100+ then, quote, ``flag'' these
resolutions, drawing greater attention to them and making them
even more effective.
If companies still fail to bow to its demands, the climate
cartel then seeks to replace members of their boards of
directors. Notably, the climate cartel did so at ExxonMobil in
2021, replacing three directors with members of its own
choosing.
The climate cartel's commitment and demands reduce output
and raise prices for American consumers. There's no way to
reach, quote, ``net-zero'' without reducing production and
diminishing the American standard of living.
These negative impacts are especially pronounced in the
fossil fuel, aviation, and agricultural sectors--in other
words, the very industries that allow Americans to drive, fly,
and eat.
For example, the climate cartel has said that fossil fuels
must, quote, ``stay in the ground'' to reduce carbon emissions.
Similarly, the climate cartel has called for reducing the
number of airplane flights by 12 percent and capping passenger
air travel to 2019 levels. Likewise, the climate cartel has
called for cutting American beef consumption roughly in half
because, quote, ``cows are the new coal.''
This sort of anticompetitive collusion has been illegal
under the U.S. antitrust laws for more than a century, yet the
Biden Administration has refused to take action to enforce the
law and protect American consumers.
In today's hearing, we will investigate the climate cartel,
its anticompetitive collusion, and the harm it continues to
inflict on the American economy and people.
I now recognize the Ranking Member, Mr. Correa, for an
opening statement.
Mr. Correa. Thank you, Mr. Chair.
I want to thank all the witnesses for being here today.
Attorney General Ellison, welcome back to Congress and to
this Committee, sir.
Attorney General Ellison. It's great to be back.
Mr. Correa. Mr. Dan Bienvenue, Chief Investment Officer for
CalPERS, I know your work--certain various Committees in the
State legislature overseeing CalPERS and CalSTRS. Let me just
say, as a former State employee, as a legislator, I have a
personal vested interest to make sure you're doing a good job,
and if you don't, I'll call you.
Mr. Chair, thank you for your opening remarks.
I just want to be clear that this hearing is not about
antitrust law or antitrust violations. This hearing is about
going after responsible fiduciary investing and shareholders
who are essentially exercising their legal rights under the
law, going after State-run pensions and private asset managers
for carrying out their fiduciary duties of considering risk and
value.
By trying to limit shareholders' rights, this essentially
harms every American on Main Street. We depend on asset
managers to take care of our hard-earned money. When
hardworking Americans retire, they want to make sure that their
pensions are safe and secure. Americans aren't looking for a
handout. We want to make sure that our hard-earned pensions and
savings are secure for today and tomorrow.
While some of us may not like how asset managers and
pension funds invest their money, their job is to invest to
meet the needs and wishes of their clients. The job is not to
make all of us happy.
Asset managers are led by two basic principles: Maximizing
return and responding to clients' wishes. Following these
principles, they have generated excellent returns for their
clients.
Maximizing returns means calculating short- and long-term
risk. Wall Street is really good at figuring out quarterly
profits, but I would say pension managers, like CalPERS, need
to focus on long-term returns and long-term risks and trying to
figure which industries and which companies will be successful
and alive and profitable in decades to come.
CalPERS, you are good at that. Many companies are doing the
same thing--even the oil and gas industry, because they know
they must adjust and prosper decades from now. This is a sheet
from ExxonMobil advancing their climate solutions in 2024.
Clients are demanding that asset managers consider long-
term risks like climate change. Many Americans see the
devastating effects--the impacts of climate change on our
society, and many Americans feel the price of climate change at
and in their pocketbooks.
Almost every day, we see destruction--destroyed houses,
flooded streets, and communities ruined. American insurance
rates are going through the roofs, if they even get insurance.
I know, back home, a lot of homeowners can't get insurance
today.
The impact has had an especially terrible impact on
affordable housing, which compounds our already-severe housing
shortage.
Extreme weather like this will cost the U.S. economy nearly
$93 billion--93 was last year; God knows what it'll cost us
this year. In fact, in 2023--that's last year--was the hottest
year on record, and 2024 is expected to surpass that record.
These are the facts. Responsible asset managers have the
duty--the legal, fiduciary duty--to take these risks into
account.
If you don't believe me, look at the numbers. Countless
studies support the financial wisdom of using climate risks in
general risk asset management. The Government Accounting
Office, or GAO, found consensus among institutional investors
that a company's long-term financial performance can be
substantially affected by sustainability-related issues. The
1,000-plus studies found, among other things, that managing for
a low-carbon future improves financial performance.
Let me say that boycotts, divestitures of any specific
industries just don't work. Instead, they cause chaos and
undermine asset managers' and asset owners' ability to carry
out their fiduciary duty. This is why CalPERS and other
concerned State officials oppose boycotts and divestitures.
Let's be clear here today: There is no boycott of the oil
and gas industry. The top three asset managers--CalPERS and
Arjuna as well--collectively have oil and gas holdings in the
hundreds of billions. For CalPERS, it's in its top 10 industry
holdings. BlackRock alone has invested $225 billion in the
American energy sector on behalf of its clients.
Today, here, today, we are seeing an attack on
shareholders. This is wrong. Remember, shareholders are owners
in a company, and they have legal rights, as owners, to vote
and demand information and inspect corporate records.
Responsible shareholders hold corporations accountable, and
we know what happens when they don't do that: The Enron
collapse--just one of many that have cost investors and
pensioners dearly.
Shareholders have the absolute rights to organize and
influence the companies that they own, working together to make
sure the company is successful, and this is called
``capitalism.'' This is called ``free enterprise.'' We should
encourage it. It's pro-competitive, pro-democratic, and pro-
free-market.
This hearing today is not about antitrust. This hearing is
an attack and a way to intimidate responsible parties for
carrying out their fiduciary duties. These allegations in a
courtroom would fail. Trust me, there's a lot of trial lawyers
ready to go to take up these causes of action and sue.
Let's put the final nail on this coffin of these so-called
antitrust allegations. There is no agreement, there is no
restraint of trade, and there is no harm to competition, and no
antitrust violation.
This Committee received over 250,000 documents, over 2.5
million pages--let me repeat: Over 2.5 million pages--and
within those pages there's no evidence of any wrongdoing.
Labeling something a cartel doesn't make it a cartel.
First, let me talk about the agreement. There's no
agreement. More specifically, there's no evidence of collusion
or price-fixing. There's not a shred of evidence supporting a
hub-and-spoke conspiracy, the way a cartel would work. In fact,
parties always have made investment decisions independently and
have been advised to do so by nonprofits working in the
sustainable-investment arena.
There is no boycott. On the contrary, the investigation
showed that asset managers targeted by this investigation
collectively maintain immense holdings in the oil and gas
industry. There's no harm to competition, no restriction on
output. Oil and gas companies' returns have skyrocketed, and
production is at an all-time high. The market is expected to
grow dramatically through year 2030. This confirms the lack of
harm, which is an essential element to their supposedly
antitrust violation.
We've talked a little bit about a lot of technical legal
terms today, but, back home, what my constituents care about is
the price of energy, the price of gasoline at the pump. If you
want to blame somebody for high gasoline prices, look at the
OPEC cartel again, which just a few days ago again agreed to
continue cutting its output through the year 2025 to counter
U.S. production increases. As OPEC cuts production, the price
of oil and gas will remain high, even with domestic production
at record levels.
Folks, don't blame sustainable energy for rising gasoline
prices. It's not investment in sustainable energy that caused
high gas prices. Didn't happen in the 1970's, and not now.
If we want to bring down the price of energy, let's
encourage competition among energy sources. Supporting
sustainable energy through investing is the winning approach.
Investing in sustainable energy is what will lower gas prices,
increase innovation, produce jobs, improve the environment, and
reduce our dependence on foreign energy. Investing in
sustainable energy is increasing competition, improving
consumer choices, and enhancing our national defense.
Let me conclude by saying that, after this hearing, three
things will be clear:
First, that financial organizations we're investigating
here today, including CalPERS and Arjuna, are investing
according to your fiduciary duty. You are taking care of your
clients and their beneficiaries, according to the law. Efforts
to undermine this will greatly harm our capitalist system and
undermine innovation.
Second, shareholders have the right--actually, shareholders
have the duty--to speak up when the company is poorly managed,
when corporations have not considered all the risks. Otherwise,
they become takeover targets.
Third, there is no antitrust violation.
So, Mr. Chair, I thank you for this opportunity, and I want
to ask for unanimous consent to introduce the following
documents: Exxon slides, ExxonMobil, ``2024 Advancing Climate
Solutions,'' responsible investing slides, CalPERS' opposition
to divestment, a BlackRock statement, Standard and Poor's
shareholder rights, oil and gas profits, CalPERS portfolio,
Ceres disclaimer, CalPERS portfolio, and a few others.
Thank you very much, Mr. Chair, and I yield.
Mr. Massie. Without objection.
At this moment, I'd like to ask also unanimous consent to
enter into the record the signatory statement that the members
of this climate cartel signed. It's an agreement. I ask
unanimous consent to submit that for the record.
All right. So, ordered.
I now recognize the Chair of the Full Committee, Mr.
Jordan, for his opening statement.
Chair Jordan. Thank you, Mr. Chair.
Thank you, witnesses, for being here. It's good to see our
former colleague, the Attorney General, Attorney General
Ellison.
If you conspire to reduce the output of a good, it's called
restraint of trade. When you form a cartel to limit supply,
it's restraint of trade. More importantly, it's illegal. It's
illegal because it drives up the cost to consumers, to
Americans, and to the people we represent.
It sure looks like that's exactly what these three
organizations are engaged in.
Now, they'll say it's for a good cause. ``We're going to
save the planet.'' Never mind that the cost of food is going to
go up, the cost of fuel is going to go up, there's going to be
less airline flights, and there's going to be less cars. Never
mind all that. ``We're saving the world.''
The courts have been clear--very clear. Quote,
Social justifications proffered for restraint of trade do not
make it any less unlawful.
How does this conspiracy work? Ceres, CalPERS, and Arjuna,
our witnesses today, formed this group called Climate Action
100. I'm sure the Chair talked about it already. They describe
themselves as ``the global Navy'' in a war to decarbonize
companies. Seven-hundred-member investors, $68 trillion in
assets.
Those member investors are required to sign a statement and
agree, as Mr. Massie just pointed out--the Chair just pointed
out. They push companies that they invest in to disclose and
reduce emissions, in some cases reduce the output of their
product.
What do we know about these groups?
Well, here's what Ceres said. This is a quote from them.
Ceres' objective is to, quote, ``make access to finance
dependent on the transition to net-zero by fundamentally
rewriting the rules of capital formation.''
Arjuna said this: The U.S. is ``facing a second civil war .
. . led by a pro-Christian agenda. This war will be fought by
the investors who have a voice in how corporate America
responds to this pro-Christian''--wow.
What does this global war, this civil war, mean to
consumers, to the American people? If these guys get their way,
what does it mean?
Even though the demand for energy is on the way up, more
energy demand around the world, they say fossil fuel should
stay in the ground. We want to--literally, they want to end the
internal combustion engine in 10 years. They want to reduce air
travel by 12 percent. They even want to restrict the amount of
beef we consume--1\1/2\ hamburgers a week.
Chair Massie eats that every meal from his grass-fed beef
on his farm in Northern Kentucky. Oh, no, no, no, 1\1/2\ all
you're allowed a week, Tom. Just forget--Mr. Massie--Mr. Chair.
They want to make it--think about this--more expensive to
drive, more expensive to fly, and when you're waiting around
the train station for the high-speed rail, you can order a
hamburger while you're waiting--unless you've already had one
that week.
Less coal, less cars, and less cows. They even said, ``cows
are the new coal.'' This is crazy.
Oh, and, by the way, the Democrats agree with all this. I
want to play a quick clip from last Congress, one of our
colleagues, when we had Chevron people, we had the oil and gas
companies in front of us. Here's his--I want you to watch this
questioning from Mr. Khanna, one of our colleagues.
[Video played.]
Chair Jordan. That's enough. We have the point. The point--
he's actually wanting oil companies to produce less oil. I
thought when you're in business to do something, you want to
make more of the product and sell more of the product.
That's what we're up against right here. That's why this
hearing is so important.
Mr. Chair, I thank you for putting this together. It's
important that we stop where Climate Action wants to take the
country.
I yield back.
Mr. Massie. I thank the Chair.
Without objection, all other opening statements will be
included in the record.
We will now introduce today's witnesses.
Ms. Mindy Lubber is President and CEO of Ceres. Ceres is a
nonprofit organization that seeks to advance its climate,
social, and governance goals through interactions with
investors, companies, and policymakers.
Ms. Natasha Lamb is Chief Investment Officer, managing
partner, and portfolio manager at Arjuna Capital. Arjuna is an
investment firm with a focus on environmental, social, and
governance, ESG, factors.
Mr. Dan Bienvenue is the Interim Chief Investment Officer
at CalPERS. CalPERS manages the pension and health benefits for
more than 1\1/2\ million California public employees.
Mr. Keith Ellison--welcome back to Congress. He's the
Attorney General of the State of Minnesota. He's previously
served in the House of Representatives, representing
Minnesota's Fifth Congressional District.
We welcome our witnesses and thank them for appearing
today.
We will begin by swearing you in. Would you please rise and
raise your right hand?
Do you swear or affirm, under penalty of perjury, that the
testimony you are about to give is true and correct to the best
of your knowledge, information, and belief, so help you God?
You may be seated--let the record reflect that the
witnesses have answered in the affirmative.
Please know that your written testimony will be entered
into the record in its entirety. Accordingly, we ask that you
summarize your testimony in five minutes.
Ms. Lubber, you may begin.
Ms. Lubber. Thank you. Microphone on?
Mr. Massie. Yep. Sounds great.
STATEMENT OF MINDY LUBBER
Ms. Lubber. I am Mindy Lubber, the Chief Executive Officer
of Ceres.
Ceres is a nonprofit organization. We work with investors
and with companies to make the business case for action as they
address some of the greatest global financial challenges facing
our world today--challenges like climate change, water scarcity
and pollution, and nature loss.
These global threats pose material financial risks. They
may be good environmental issues, or scientific, but they also
pose material financial risks to investment portfolios, to
business operations, to supply chains--thus, to the long-term
stability of our markets and our economy. That's why our tag
line has long been ``Sustainability is the bottom line.''
Our message has been heard. Today, the private sector has
widely embraced the financial imperative to improve
sustainability practices throughout their business operations
and their supply chains and to report on their efforts to
shareholders, customers, and employees.
In 2022, companies representing more than 86 percent of
total global market capitalization disclosed sustainability-
related information to their investors. More than 10,000
companies have set climate action goals or targets, including
half of the largest 2,000 global companies.
Climate change is an issue that presents both serious
financial risks and opportunities for investments and job
creation in the rapidly emerging clean-energy economy.
Investors and companies are acting on climate because the
business case is compelling.
Let's just look at the massive costs of extreme weather to
the U.S. economy, which was nearly $93 billion last year--$93
billion cost to our economy. Think about how severe drought
impacts farms across the West and negatively affects the supply
chains of the many companies that depend on our U.S.
agricultural system.
Think about utilities, which face risks in multiple
dimensions. Their infrastructure is at risk from extreme
weather and wildfires, and they also face other business risks
if they fail to adopt cheaper, cleaner technologies.
Large U.S.-based oil and gas companies have set emission-
reduction targets, indicating that businesses are taking these
risks seriously across all sectors of our economy.
That's where Climate Action 100+ comes in--a global,
investor-led initiative where shareholders--shareholders who
own companies--engage with some of their largest portfolio
companies on climate risk management. This is a key part of
monitoring effective corporate governance for high-emitting
companies. Shareholders want companies in their portfolios to
thrive.
Ceres supports these engagements by serving as an
educational resource for investors and companies. We share
research and analysis, case studies, and industry best
practices. For instance, we provide tools for benchmarking
progress on companies' previously announced goals and their
targets.
It's important to note that Climate Action 100 investors
are independent in every way. While Ceres may offer insight
that they consider valuable, each investor acts separately and
in the best interests of their shareholders, their
beneficiaries, and their clients. Addressing climate-related
risks is 100 percent in line with investors' fiduciary
responsibility.
The companies that investors engage with in dialog and
engagements with shareholder discussions, those companies are
also independent. They can--and they do--say no to investors,
suggest to investors at any time they choose. That's capitalism
at work, as companies and their shareholders discuss how to
create and maintain a long-term value of the company.
The letter inviting me to this hearing referred to our work
as ``collusion'' and noted it could violate U.S. antitrust law.
We firmly agree with this--disagree with this assertion, but,
at the same time, as asked, we have fully cooperated with the
Committee's investigation and have produced more than 90,000
pages of documents.
We are proud of our work. We have nothing to hide.
As far as antitrust, while I'm not an expert on this, I can
tell you that what we support is voluntary, private-sector-led
processes in which investors and businesses work to adapt to a
changing world. This is how companies and the American economy
remain profitable and competitive.
Thank you for the opportunity to present Ceres'
perspective. I look forward to answering your questions.
[The prepared statement of Ms. Lubber follows:]
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Mr. Massie. Thank you, Ms. Lubber.
Ms. Lamb, you may begin.
STATEMENT OF NATASHA LAMB
Ms. Lamb. Good morning. My name is Natasha Lamb, and I am
the Chief Investment Officer at Arjuna Capital. Arjuna is pro-
business, pro-competition, pro-democracy, and pro-investor.
Arjuna Capital manages $500 million in client assets, and
we have 10 employees. We are a boutique firm and a small
business that I cofounded 11 years ago.
I did so after hitting up against roadblocks as a woman and
a mother in the finance industry so that I could create a
better life for myself and my family, and do my small part to
create a better world for my children to inherit.
I also wanted to create a better investment platform for
our clients. That is, I wanted to offer our clients cutting-
edge investment strategies, tools, and advice that integrates
financially material risks and opportunities that Wall Street
has in the past overlooked.
Whether it's climate change, resource scarcity, inequality,
or healthcare crises, these investment headwinds present both
risk and opportunity. Ignoring the challenges can leave
investors flatfooted as they face the downside risks of a
changing world, and ignoring the opportunities can limit the
upside potential of their portfolios.
At Arjuna, we take material environmental risks into
account when we make investment decisions and when we engage
with companies whose stock our clients own in their portfolios.
I consider myself fortunate to have been part of the first
cohort of investment professionals that were formally trained
to understand the materiality of sustainability factors, now
nearly 20 years ago. I consider my investment firm a leader in
how to do it well.
The allegations I face today are entirely unsupported by
fact.
To begin, we manage $500 million in client assets, yet
today we're being accused of disrupting a $1.7 trillion energy
industry--over 3,000 times our size--and the incredible
lobbying, marketing, and market power that goes along with it.
Second, we favor well-functioning capitalism, not
collusion. Unlike oil cartels, which do wield the power to
impact energy prices, we do not.
We are capitalists, and we seek material public
information. In fact, we seek the full potential of capitalism,
with more perfect information, so that externalities like
greenhouse-gas emissions can be taken into account. Because,
with better information, investors know what we need to know to
make the best choices. A free market, with the free exchange of
ideas and information, will power the innovation needed to
commercialize solutions to our greatest sustainability
challenges.
Third, we favor positive competition. We seek to invest in
the best companies we can for our clients--those that are at a
competitive advantage because they are managing material risks
and opportunities well. When companies have room for
improvement, we like to let them know.
Last, we are pro-democracy. As share owners in
corporations, investors have the right to express concerns to
company boards through the shareholder proposal process. Other
investors have the right for the shareholder proposal--to vote
for the shareholder proposals they believe are in the best
interests of their companies. One share, one vote.
In making decisions on what shareholder proposals warrant
support, the Securities and Exchange Commission encourages,
quote, ``shareholders' ability to independently and freely
express their views and ideas to one another.''
Since Congress's first information request in August of
last year, Arjuna Capital has been fully cooperative in this
investigation. We have produced all the documents requested,
and I have appeared here voluntarily at the invitation of Chair
Jim Jordan.
We have not engaged in any collusion. We've done nothing
wrong.
I stand before you today as an investment manager, mother,
entrepreneur, small-business owner, shareholder advocate, and
capitalist who is acting in the best long-term interests of my
clients.
I'm happy to answer any of the Committee's questions.
[The prepared statement of Ms. Lamb follows:]
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Mr. Massie. Thank you, Ms. Lamb.
Mr. Bienvenue, you may begin.
STATEMENT OF DAN BIENVENUE
Mr. Bienvenue. Good afternoon, Chair Massie, Ranking Member
Correa, and the Members of the Subcommittee.
I'm Dan Bienvenue, and I serve as the Interim Chief
Investment Officer for the California Public Employees'
Retirement System, or CalPERS, as it's known, and I've served
in this interim role for the last 9 months. I've been a member
of the CalPERS Investment Office for nearly 20 years.
I'm pleased to appear before you on behalf of CalPERS, and
I want to thank you for the opportunity to share our work.
This morning, I'll provide an overview of CalPERS, I'll
explain why we believe climate-change risks are important for
us to consider as investors, and, finally, I'll talk about how
we view climate change as an investment opportunity to maximize
returns.
So, let me begin by saying that I'm proud of the work that
CalPERS does to preserve and grow the assets entrusted to us by
California's public servants. As a fiduciary and a long-term
investor, we consider many risks in our portfolio, including
climate-related risks. It would be irresponsible for us to
ignore factors that can fundamentally impact the long-term
viability of our investments.
Further, we recognize that we can't do this alone, and
we're proud to participate in initiatives like Climate Action
100+ to help foster conversations with other investors and with
companies about ways to improve shareholder value.
This is not collusion. It's collaboration.
Every proxy vote we cast and every engagement we have with
a company is guided by our single North Star--that's, what's in
the best interests of our members and their long-term returns.
To give you some background about CalPERS, we manage
approximately $500 billion in assets. We're a fiduciary who
provides retirement benefits to more than 2.2 million public
employees, and we pay more than $31 billion a year in
retirement benefits, each and every year. More than half of
that, nearly 56 cents of every dollar, comes from investment
returns.
By law, we must discharge our duty of prudence and loyalty
for the exclusive purpose of providing benefits for our members
and beneficiaries. This duty takes precedence over any other
duty.
This is why we have a long history of being an active
shareholder and an advocate for good governance in corporate
America. The body of research and evidence is clear that good
corporate governance is good for shareholder value.
Now, let me turn to the topic of climate-change risks.
We believe that climate change represents an existential
threat and one that we cannot afford to ignore as long-term
investors. The consequences of inaction will be measured on the
bottom line of the portfolio companies we rely on for
investment returns to pay benefits.
Our roadmap to addressing these risks is found in our
sustainable investments plan. In this plan, we seek to minimize
this risk through engaging the management and corporate boards
of companies we own to encourage them to give due
considerations to their greenhouse-gas emissions and to how
they will navigate the energy transition.
We make climate-change risks and opportunities part of our
investment decisionmaking, along with the myriad other risks
and opportunities, as we look to navigate this $500 billion
portfolio through markets. One of the ways we do this is
through partnering with other investors through organizations
like Climate Action 100+. Another way is that we identify
investment opportunities that can benefit from the transition
to a low-carbon economy.
It's these last two points that I would like to expand on a
bit.
Six and a half years ago, a large group of global
institutional investors launched a coalition committed to a set
of principles in response to climate change. Today, the
initiative has more than 700 investor signatories, and of the
170 focus companies, 42 are oil and gas companies.
To be clear, this is engagement, not divestment. We remain
invested because we believe owning these companies provides
good value for our members. We also think that we can use our
voices to make them even better investments.
While this work is important, we recognize that our biggest
opportunity is to invest in the future. That's why we've
committed $100 billion to invest in what we call ``climate
solutions''--namely, investments that we believe are positioned
to be advantaged by the transition to a low-carbon economy.
We will invest in companies and strategies with the goal of
leaning into underpriced opportunities and leaning away from
overpriced risks, and we will invest in what is often referred
to as ``brown-to-green'' investments.
The marketplace for all these investments is rife with
opportunity, but it's also laden with risks, which is why we
keep our eye on our North Star: Delivering long-term returns to
pay pensions.
So, in closing, let me underscore that our primary
fiduciary duty is to make good investments to fulfill our
responsibility to our members. We believe companies' long-term
value creation for our members requires effective
identification, monitoring, and management of risks and
opportunities, including climate-change risk.
So, thank you again, Chair Massie, Ranking Member Correa,
and the Members of the Subcommittee, for inviting to us to
participate in this hearing. I look forward to answering your
questions.
[The prepared statement of Mr. Bienvenue follows:]
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Mr. Massie. Thank you, Mr. Bienvenue.
Attorney General Ellison, you may begin.
STATEMENT OF ATTORNEY GENERAL KEITH ELLISON
Attorney General Ellison. Thank you, Mr. Chair and Ranking
Member--
Mr. Massie. Is your microphone on?
Attorney General Ellison. Oh, let me make sure. Yes. Now,
we're good.
Thank you, Chair Massie, and thank you, Ranking Member
Correa, and the Members of the Subcommittee. My name is Keith
Ellison, and I serve as the Minnesota Attorney General.
I had the privilege and the honor of serving in the House
of Representatives for 12 years, and it is really a joy to see
many of you here today who I served with and who have been
serving since I left.
During the time I was in Congress, I helped start the
Congressional Antitrust Caucus. Today, protecting fair and
competitive markets is a cornerstone of my work as the
Minnesota Attorney General.
This Subcommittee is very important because there are
numerous examples of unfair coordination, consolidation in our
markets, and they are all too common. From healthcare to Big
Tech, to agriculture, to concert tickets, anticompetitive
behavior does real harm to Americans, as reduced competition
leads to stifled innovation and higher prices. It is crucial
that antitrust enforcement focus on the growing and very real
anticompetitive threats all around us.
Our antitrust laws prohibit agreements among competitors
that unfairly restrain competition in a given market--for
example, when competitors agree to fix prices or divide up a
market among themselves.
To prove this kind of cartel activity, enforcers--like me--
must prove the existence of an agreement between competing
firms. However, the group of competitors choosing the same
course of action is not enough to prove the existence of an
agreement. Courts have long required evidence beyond parallel
conduct to conduct to establish the existence of an agreement.
Agreements that violate antitrust laws must also harm
competition and outweigh any procompetitive benefits. Private
plaintiffs must prove that an antitrust violation caused harm
to them specifically.
In recent years, some have suggested that ESG, or
responsible investing that accounts for the risks of climate
change or other environmental, social, or governance factors,
may be illegal conspiracies under the antitrust law.
Let me state this clearly: This is wrong.
Antitrust law does not prohibit businesses or individuals
from exercising their First Amendment right to work together to
influence legislative or regulatory policy. The Supreme Court
has made this principle very clear more than 60 years ago with
the Noerr-Pennington doctrine, which allows companies to work
together to influence public policy.
Antitrust laws also do not prohibit businesses from
independently choosing to take a similar course of action as a
competitor.
Crucially, nothing in the antitrust laws prevents
businesses from accounting for climate change.
The corporate sector now overwhelmingly recognizes that it
is vital to consider climate change, workplace safety,
corruption, among other important risk factors. Of the 250
largest global companies, 96 percent now issue sustainability
reports. They don't do it out of ideology; they do it because
it's responsible corporate governance. They don't do it out of
altruism; they do it because of their responsibility to
shareholders, and shareholders expect it.
Similarly, investor initiatives focused on the management
of risks of climate change have gained momentum. According to
Morgan Stanley, 95 percent of institutional asset managers have
integrated or are considering integrating some form of
responsible investing into their portfolios. The top reason
they give for doing so is the traditional market concerns of
managing risk and maximizing the potential for long-term
financial return.
Yet, some have brought accusations that initiatives like
these violate antitrust laws, without producing any evidence of
an agreement among competitors with anticompetitive effects in
the market.
As an antitrust enforcer, I consider these unsupported
allegations irresponsible. Empty allegations can chill entirely
legal business activity and slow vital innovation. Indeed, in
light of the rapidly mounting evidence, businesses and
investors should be applauded for considering the impact of
climate change.
As Attorney General, I also serve on the governing board of
the Minnesota State Board of Investment, the SBI. The SBI is a
fiduciary for roughly $140 billion in assets, serving more than
840 active and retired Minnesota public employees. At the SBI,
we consider all material risks and opportunities, which include
environmental, social, governance factors, and we are one of
the highest-performing public pension funds in America. We are
proof that responsible investing and high market returns can,
and do, go hand-in-hand.
Institutional investors and financial professionals must
continue to have the freedom to weigh the full spectrum of
risk-to-value of their investments. Both the logic of the
market and the law support their doing so. Baseless but well-
funded accusations to the contrary harm America's economy and
prosperity.
Thank you.
[The prepared statement of Attorney General Ellison
follows:]
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Mr. Massie. Thank you, Mr. Attorney General.
We will now proceed under the five-minute rule with
questions.
The Chair recognizes the gentlewoman from Wyoming for five
minutes.
Ms. Hageman. Thank you.
Mr. Bienvenue, in your testimony, you State that ``to be
clear, this is engagement, not divestment.'' We would agree,
which is why the report this Committee put out yesterday came
to the same conclusion.
Where we disagree is that your engagement is designed to
fundamentally change business and industries to the detriment
of consumers in a manner which is indeed not collaboration but
collusion.
CalPERS is a founding member of Climate Action 100+. Is
that correct?
Mr. Bienvenue. Climate Action 100+ was founded by Ceres,
and CalPERS was involved in its creation early on.
Ms. Hageman. CalPERS is a founding member of Climate Action
100, correct?
Mr. Bienvenue. CalPERS is a founding member and a signatory
to Climate Action 100+.
Ms. Hageman. Thank you.
Climate Action 100 has 170 focus companies, 42 of them
being oil and gas companies. Is that also correct?
Mr. Bienvenue. Climate Action 100+ has 170 focus companies
and 42 oil and gas companies, where we come together and
discuss ideas--
Ms. Hageman. Is it--
Mr. Bienvenue. --and make independent decisions on how we--
Ms. Hageman. So, my statement is correct. Is that right?
Mr. Bienvenue. As I said, Climate Action 100+ has 170 focus
companies, as I said in my opening statement, and 42 of them
are oil and gas companies, where we come together to discuss
independent--
Ms. Hageman. One of the objectives of the Climate Action
100+ is for these focus companies to reduce their emissions. Is
that correct?
Mr. Bienvenue. Climate change is something that is
happening--
Ms. Hageman. Would you please answer my question?
Mr. Bienvenue. There's context to your question.
Ms. Hageman. One of the objectives of Climate Action 100 is
for these focus companies to reduce their emissions. Is that
correct?
Mr. Bienvenue. Climate change is something that is
happening--
Ms. Hageman. Is that correct? Answer my question, please.
Mr. Bienvenue. As I say, climate change is something that
is happening--
Ms. Hageman. Andrew Behar, the CEO of As You Sow, testified
in his deposition that, quote, ``An oil and gas company could
not reach net-zero while continuing to produce fossil fuels.''
As You So president Danielle Fugere testified that, quote,
``ultimately, fossil fuel use has to be reduced.''
GFANZ Co-Chair Mark Carney testified to the Committee that,
quote, ``More than half of the world's coal reserves need to
stay in the ground in order for the world to be in line with
Paris.''
So, for the 42 oil and gas companies that Climate Action
100 focuses on, the way for them to reduce emissions would be
for them to reduce their outputs. Is that correct?
Mr. Bienvenue. Can you repeat the question, please?
Ms. Hageman. For the 42 oil and gas companies that Climate
Action 100 focuses on, the way for them to reduce emissions
would be for them to reduce their outputs. Is that correct?
Mr. Bienvenue. What we focus on with the companies that we
engage--
Ms. Hageman. Why won't you answer my question?
Mr. Bienvenue. I'm attempting to answer your question. What
we focus on--
Ms. Hageman. No, you're not. You're trying to avoid it.
Mr. Bienvenue. What we focus on with the companies that we
engage is for them to be long-term productive--
Ms. Hageman. To reduce their outputs, correct?
Mr. Bienvenue. We would never suggest that an organization
that is an oil company--
Ms. Hageman. Is CalPERS committed to pursuing policies
which cut fossil-fuel outputs even if that would increase
prices on the American people?
Mr. Bienvenue. CalPERS is focused on generating returns to
pay pensions over generations.
Ms. Hageman. Even if it makes it more difficult for them to
put gasoline in their cars?
Mr. Bienvenue. Again, our North Star is about producing
returns to pay pensions--
Ms. Hageman. That's not what you write, and it's not what
you've testified to previously.
Ms. Lubber, Ceres is a co-founder and member of Climate
Action 100. Is that also correct?
Ms. Lubber. Correct.
Ms. Hageman. Has Ceres and Climate Action 100 identified
the AG sector, especially livestock production, as an industry
which must reduce its emissions?
Ms. Lubber. It wasn't, I believe, the first--
Mr. Massie. Microphone, please.
Ms. Hageman. Would you turn on your microphone, please?
Ms. Lubber. I believe there are some AG-sector companies in
that cohort.
Ms. Hageman. OK. There's no way for the AG sector to reach
net-zero without reducing beef production, is there?
Ms. Lubber. I don't know that this is clear. There are ways
to do farming, there are ways to create energy, that are less
greenhouse-gas-emitting.
Many of the oil and gas companies that you were talking
about, it's not about not producing; it's about creating
options and transforming their technologies and capturing the
oil and gas emissions.
Ms. Hageman. It's very interesting to me--my mother is 100
years old; she'll be 101. The changes that she's seen in the
last 100 years are absolutely mind-blowing in terms of the
technological advances, the increase in life expectancy, the
decrease in infant mortality rate, our overall prosperity, and
what we have created in these countries.
There's one reason why we have seen the prosperity in the
last 100 years that has never been rivaled in world history,
and it's because of the commercial production of affordable
energy.
Every single one of you and your organizations want to
destroy that. You are evil. What you are attempting to do and
the violations of law that you are engaged in is absolutely
stunning. I think it's telling that you won't answer my
questions.
With that, I yield back.
Mr. Massie. The gentlelady yields back.
The Chair now recognizes the gentleman from California for
five minutes.
Mr. Correa. Thank you, Mr. Chair.
First, let me ask unanimous consent to enter into the
record this article stating that Biden is releasing more oil
into the economy to lower gas prices for American consumers.
Mr. Massie. Without objection.
Mr. Correa. Mr. Bienvenue, let me start off by asking you a
few yes/no questions.
Do your investments include oil and gas companies?
Mr. Bienvenue. Yes.
Mr. Correa. Is that one of your top areas/sectors of
investment?
Mr. Bienvenue. It is.
Mr. Correa. Do you include these investments because they
make sense and are consistent with your fiduciary duty to make
sure I can retire on what you're managing?
Mr. Bienvenue. Yes, that's correct.
Mr. Correa. Do you impose restrictions on your investments
or force divestitures of any specific industries?
Mr. Bienvenue. No, we do not.
Mr. Correa. Do you invest in a good cause?
Mr. Bienvenue. I said I'm very proud of the work that I do.
Yes, I invest in a very good cause.
Mr. Correa. Do you invest to take care of pensions?
Mr. Bienvenue. While generating--I invest to take care of
pensions and generate returns to pay pensions.
Mr. Correa. Thank you. Mr. AG, let me talk to you a little
bit about antitrust.
You are the Chief Law Enforcement Officer in your State. Is
that correct?
Attorney General Ellison. That's right.
Mr. Correa. You enforce antitrust law?
Attorney General Ellison. Vigorously.
Mr. Correa. On this board, this one right here, we have the
elements of a violation of a Section 1, Sherman Antitrust Act:
(1) An agreement between competitors; (2) restraint of trade or
interference with markets; and (3) harm to competition.
Mr. AG, do you agree that these are the elements of a
Section 1 antitrust violation?
Attorney General Ellison. Yes, I do.
Mr. Correa. One needs to prove all elements to be a
violation of the antitrust law, correct?
Attorney General Ellison. That's right.
Mr. Correa. Let me start by asking you and then the other
witnesses--first, Mr. AG, to your knowledge, did any of these
parties make an agreement on how to invest?
Attorney General Ellison. No.
Mr. Correa. To the other witnesses--Arjuna, Ceres, and
CalPERS--did any of you enter into an agreement with any other
entity on how you would invest?
Ms. Lamb. No.
Ms. Lubber. No.
Mr. Bienvenue. No.
Mr. Correa. So, there was no agreement.
Mr. AG Ellison, the next question is for you, sir. As an
antitrust expert, is there any evidence that any of the
entities' actions are consistent with or constitute restraint
of trade or interference with the free market?
Attorney General Ellison. Not in any case I've seen.
Mr. Correa. So, we have no restraint of trade.
Sir, is there any evidence of harm or competition,
specifically harm to competition to the oil and gas industry?
Attorney General Ellison. None has been presented to me,
and I haven't seen any.
Mr. Correa. So, Mr. AG, to sum it up, we have no agreement,
we have no restraint on trade, we have no harm to competition.
Mr. Chair, it seems clear to me that there is no antitrust
problem here.
Attorney General Ellison. I would agree.
Mr. Correa. I have another minute and a half?
Mr. Massie. Yep.
Mr. Correa. Questions for Ceres and CalPERS: Do you tell
voluntary members of any of these organizations that you Co-
Chair how to invest?
Ms. Lubber. We do not.
Mr. Correa. Ms. Lamb?
Ms. Lamb. No.
Mr. Correa. Do you tell any volunteer members to boycott
any company or industry?
Ms. Lubber. We do not.
Mr. Correa. Do you, ma'am?
Ms. Lamb. No, we do not.
Mr. Correa. Do you share any information on pricing or any
other confidential information with any other voluntary
members?
Ms. Lubber. We do not.
Ms. Lamb. No.
Mr. Correa. Do you take action against any voluntary
members when they do not follow your advice?
Ms. Lubber. No.
Ms. Lamb. Absolutely not.
Mr. Correa. Thank you very much.
Mr. Chair, I yield my time.
Mr. Massie. I thank the gentleman from California.
I now recognize the gentleman from Florida for five
minutes.
Mr. Gaetz. Mr. Bienvenue, how much do you invest each year
in behalf of how many of your members?
Mr. Bienvenue. We manage a $500 billion portfolio on behalf
of our 2.2 million members and beneficiaries.
Mr. Gaetz. You've highlighted, your principal
responsibility is return for those beneficiaries, right?
Mr. Bienvenue. Correct. Everything that we do every day is
about generating returns to pay benefits over generations.
Mr. Gaetz. You've worked there 20 years. You've been the
principal deputy since 2020, right?
Mr. Bienvenue. I was named the Deputy Chief Investment
Officer in August 2020--or, I'm sorry, in April 2020.
Mr. Gaetz. OK, great.
So, there are some parallels between what's going on with
ESG and DEI. You don't deny that CalPERS has a DEI agenda,
right?
Mr. Bienvenue. CalPERS is all about generating returns to
pay benefits, and every topic that we approach is through that
lens.
Mr. Gaetz. Well, does DEI improve the returns to your
investors?
Mr. Bienvenue. I think part of good governance of a company
is having diverse perspectives brought to bear as they manage
that company. I feel strongly about that for the investment
team that I lead also; we want diverse--
Mr. Gaetz. What is the evidence that you rely on for the
belief that the DEI agenda will produce better returns? Is
there any study, report, analysis?
Mr. Bienvenue. As an investor, I read research reports
constantly. I probably read five, six, and eight of them a day.
So, over the course of my career, that's probably been
thousands of research reports--
Mr. Gaetz. No, I'm just wondering if there is one that
sticks out in your mind and you can say, Congressman, I'm here
to do good by these 2.2 million beneficiaries, and my embrace
of DEI, this is what I can point to as the evidence that's
helping them?
Mr. Bienvenue. Every data-based study can tell lots of
different things, and every data works that way. That's the way
investing works. Remember that when we're focused on investing,
we're focused on how we--
Mr. Gaetz. Mr. Bienvenue, you can either cite us a study or
you can't. You can't, right? OK.
Mr. Bienvenue. In the thousands of studies that I--
Mr. Gaetz. Well, just name one--OK.
Well, here's what--I found a study that, actually, CalPERS
did. You guys did this study. It's entitled ``Emerging &
Diverse Manager Data Report.''
I'm citing from the third--oh, I'm sorry, the--let's see--
I'm citing from the sixth page of the report, where it says,
``Since inception, current diverse managers generally under-
performed nondiverse managers in the asset class and the policy
benchmark.''
Are you familiar with this report?
Mr. Bienvenue. Could I see a copy of that study, please?
Mr. Gaetz. Well, Mr. Chair, I seek unanimous consent to
enter into the record the ``Emerging & Diverse Manager Report''
published by CalPERS.
Mr. Massie. Without objection.
Mr. Gaetz. I'm not able to show it to you now, but you
don't have any basis to disagree with the agency you've been a
part of leading saying that the diverse--the DEI hires aren't
doing as well as the non-DEI hires?
Mr. Bienvenue. As I say, when we think about diversity, we
think about diverse perspectives being brought to bear on
investment decisions--
Mr. Gaetz. Right, OK, so those are two different things,
Mr. Bienvenue. Because, on one hand, there's provide returns
for my investors. What your own data says is that your DEI
hires underperform there. Then, on the other hand, you say,
well, all these diverse perspectives are really important.
I worry about market manipulation and the bullying.
Because, as I review what CalPERS has put out under its own
investment guidelines, you brag about the fact that you've
voted against 768 directors at the companies you invest in,
most recently, and then in the prior year you'd only voted
against 133 directors.
So, is CalPERS voting against people as directors for
companies based on their skin color?
Mr. Bienvenue. We take up every vote independently based on
the merits of the vote itself.
Mr. Gaetz. Right, but do you ever consider, like, someone's
skin color? Because it's pretty immuta--people don't choose to
be White, Black, or Asian; they just are.
Mr. Bienvenue. We choose based on what'll make the best
oversight--
Mr. Gaetz. OK. So, you're under oath here, Mr. Bienvenue.
Can you deny under oath that CalPERS is voting against
directors based on the color of their skin?
Mr. Bienvenue. I can tell you, we make every vote based on
what'll make that the best board for oversight of that company.
Mr. Gaetz. Right. The best board is actually not doing so
well.
So, Mr. Chair, let's look at the scorecard. In the State of
Florida, where we aren't pushing ESG and DEI, the Florida
retirement system is netting a 7.5-percent notch for the fiscal
year.
May I enter that into the record?
Mr. Massie. Without objection.
Mr. Gaetz. CalPERS reports only 5.8 percent for 2022-2023.
Can I enter that into the record as well?
Mr. Massie. Without objection.
Mr. Gaetz. So, you're not performing as well. Your own data
says that your DEI hires aren't performing as well.
You were there for 20 years, and you applied twice for the
Chief Investment position, and you were passed over for that
position twice. You said you weren't going to apply for it the
third time because you'd been passed over twice, and I guess
they've hired an immigrant to do that job instead.
Do you think that maybe you were passed over for some of
these DEI reasons?
Mr. Bienvenue. CalPERS' hiring decisions is their own
hiring decisions, and I'm not really a part of that, candidly,
depending on--
Mr. Gaetz. Clearly you aren't, and I think we all know why.
I yield back.
Mr. Massie. For what purpose does the gentlelady from
Wyoming seek recognition?
Ms. Hageman. I just ask for unanimous consent to submit two
articles into the record: ``The Moral High Ground: The Left's
[so-called] `morally superior' policies kill millions and
impoverish billions''; and ``Hawaii Five Uh-Oh! Power Outages
in Paradise: How Hawaii's mandated `energy transition' set the
table for rolling blackouts.''
Mr. Massie. Without objection. The Chair now recognizes the
Ranking Member of the Full Committee, Mr. Nadler, for five
minutes.
Mr. Nadler. I thank the Chair.
Mr. Chair, everything the American people need to know
about today's hearing took place at a July 2022, meeting of the
American Legislative Exchange Council, or ALEC, the corporate
group that arranges meetings between Republican State
legislators and lobbyists to push extreme rightwing policies in
all 50 States.
It has been reported that this meeting featured a
presentation from the Texas Public Policy Foundation, or TPPF,
a climate-denying activist group that has received funding from
fossil fuel companies and the Koch brothers' network. The TPPF
representative told the conference that his group was working
with the Committee of the Texas State legislature to subpoena
a, quote, ``truckload of documents from financial institutions
involved in sustainable investment initiatives.'' Their goal
was to find evidence that the companies had violated the
antitrust laws.
The Republican majority in this Committee answered the call
and followed the exact same playbook in its own investigation
of sustainable investment: (1) Accuse businesses of antitrust
violations; (2) subpoena them for as many documents as
possible; and (3) desperately search for facts to support a
predetermined conclusion.
The majority spent 18 months bullying more than a dozen
parties over their investment practices. These include
financial institutions both large and small, nonprofits, and
the public pension fund. They've received more than 2.5 million
pages of documents and grilled witnesses for over 20 hours.
What has been the result? Not only does all this evidence fail
to show an antitrust violation; it shows just how absurd the
majority's theories are.
Here are the facts: First, participants in sustainable
investment initiatives are independent. They do not coordinate
their activities.
Second, these sustainable investment initiatives do not
involve price fixing, boycotts, or divestment at all.
Third, these initiatives are good for competition.
Unlike the Republicans, businesses and investors recognize
that climate change is real. and they need to plan for it.
Sustainable investing is good for companies.
Given these facts, no serious antitrust enforcer would
bring a case against these investment initiatives. That's not
what this investigation is really about. It's really about a
shadow campaign by the far right and their allies in the oil
and gas industry to inject their crusade against sensible
climate policy into corporate board rooms.
Multiple independent studies have shown that politically
motivated restrictions on investment raise borrowing cost for
local governments and saddle taxpayers with unnecessary fees.
These misguided policies are also projected to reduce returns
for State pension funds, threatening the retirement savings of
teachers, firefighters, and other dedicated public servants.
The majority would undoubtedly impose these same policies
on the whole Nation if they ever got the chance, passing on the
cost to the American people. For now, they are content to abuse
the Committee's oversight powers on a shameful partisan fishing
expedition, knowing that the investigation will scare
businesses and investors away from these lawful and
procompetitive initiatives. For the sake of our economy and our
climate, we should all hope that they do not succeed.
I thank our witnesses for appearing at today's hearing, and
I regret that they have had their reputations dragged through
the mud by the majority's entirely unfounded accusations.
Attorney General Ellison, I also want to welcome you back
to the Judiciary Committee. I wanted to ask you, in your view,
can dark money groups making baseless antitrust allegations
have a chilling effect on legitimate business and investment
activity?
Attorney General Ellison. Absolutely, Mr. Chair. In fact, I
think that is the effect of this proceeding today, to
intimidate companies that are trying to improve returns, reduce
risk from doing so, in favor of a specific industry that
clearly has come together to try to weaponize Congress to help
lock America into their product and to try to stifle innovation
in new other forms of energy that are more amenable to
sustainability.
Mr. Nadler. Thank you.
This coordinated dark money campaign against responsible
investment has seen great success in convincing State
legislatures to pass laws injecting politics into investment
decisions. In the 2023 legislative season alone, at least 14
States approved new limits on responsible investment.
Mr. Ellison, what effect would State policies blacklisting
films from State--blacklisting firms from State businesses over
their climate commitments have on the citizens of your State?
Attorney General Ellison. Well, if I understood your
question, Mr. Chair, I can tell you that at the SBI we're
trying to have more options, more choice, more ways to make
good decisions for the beneficiaries of our pension fund. Any
kind of promotion of ideas that would restrict us from
considering what's in the best interest of the people who
benefit from our public pension fund would be adverse to the
best interest of the people in our State.
Mr. Nadler. Thank you.
Mr. Chair, I have two UC requests. The majority here seems
to be concerned about a cartel. The Biden FTC actually found
evidence of a cartel, but in oil and gas. I ask unanimous
consent to enter into the record a joint letter from Democratic
Members of this Subcommittee urging the DOJ to investigate oil
and gas collusion after the FTC found evidence of their price-
fixing schemes. If the Republicans are so concerned about
collusion here, which we have shown is not apparent why aren't
they sending letters about the supposed collusion to our
antitrust enforcers or State AGs?
Mr. Chair, I ask unanimous consent to enter into the record
a McKinsey Diversity Matters report which says that companies
committed to diversity show, quote,
A 39 percent increased likelihood of outperformance for those
in the top quartile of ethnic representation versus the bottom
quartile. The penalties for low diversity on executive teams
are also intensifying. Companies with representation of women
exceeding 30 percent (and thus in the top quartile) are
significantly more likely to financially outperform those with
30 percent or fewer.
I ask unanimous consent?
Mr. Massie. Without objection.
Mr. Nadler. Thank you. I yield back.
Mr. Massie. The Chair now recognizes the gentleman from
North Carolina for five minutes.
Mr. Bishop. Thank you, Mr. Chair.
Mr. Ellison, you've opined that you see no antitrust
violation here. Have your fellow State Attorneys General, some
of them, expressed the opposite opinion?
Attorney General Ellison. Some of them have.
Mr. Bishop. Thank you, sir. You said that--you drew this
distinction between there being an agreement in restraint of
trade or concert of action without an agreement.
Let me ask this of another witness, one of the participants
in the Climate Action 100+. There's something I understand
called a signatory handbook. Is that right, Mr. Bienvenue?
Mr. Bienvenue. I'm not sure about a signatory handbook--
Mr. Bishop. I bet you--
Mr. Bienvenue. --but there are signatories.
Mr. Bishop. There are signatories. You're aware there are
signatories.
Ms. Lubber, right, there's signatories? There's a signatory
handbook, isn't there?
Ms. Lubber. There is a--
Mr. Massie. Microphone, please.
Mr. Bishop. Can you turn your microphone on please, ma'am.
Ms. Lubber. Sorry.
Mr. Bishop. So, look, in my long experience practicing law
before I entered the public sector, signing something generally
signified something. What do you understand signing to mean,
Mr. Bienvenue?
Mr. Bienvenue. As I understand it, one of the critical
things that signing it says is that every decision that has
been made and will be made is independently made. It is made in
the best interest of those investors, whether that's investment
decisions, proxy voting decisions, or engagement decisions.
Mr. Bishop. Does signing--let me put it more simply. Does
signing indicate agreement?
Ms. Lubber. No. It indicates that every investor will look
at the financial implications of climate risk, and then--
Mr. Bishop. So, they're signing to say they're not agreeing
to anything? Are they just agreeing not to agree?
Ms. Lubber. No.
Mr. Bishop. Is that what the signature is about?
Ms. Lubber. They are agreeing to address and look at the
financial risks and implication of climate change, whether it's
the $93 billion cost to our global economy--to our U.S. economy
last year, to look at it and consider it.
Mr. Bishop. Ms. Lubber, do you understand that agreements
to restrain trade are unlawful?
Ms. Lubber. Absolutely.
Mr. Bishop. Yes. Including an agreement to exert combined
economic power to suppress output or increase prices. That's a
cartel, right?
Ms. Lubber. That is absolutely not what Climate Action
100+--
Mr. Bishop. So, your signers, your signatories are not
agreeing to do that, right?
Ms. Lubber. They are not agreeing. They agree to look at
climate risk. Each of them says in the disclaimers in every
piece of material--
Mr. Bishop. Do you seek output reductions of fossil fuels?
Ms. Lubber. No.
Mr. Bishop. You do not?
Ms. Lubber. No. The first discussions that have taken
place, (1) are disclosure of information. Our market does
better when they understand that the insurance industry are
pulling out many of our most important States.
Mr. Bishop. Yes, ma'am. No, if you could just answer my
questions for me. I understand the Climate Action 100+ was
designed to harness the collective influence of those signers.
Is that right?
Ms. Lubber. To consider climate risk, not to--each investor
has said--
Mr. Bishop. Just to consider it.
Ms. Lubber. Right.
Mr. Bishop. Not to pressure anybody?
Ms. Lubber. That's right. Each investor votes their own
shares, has their own conversations, and needs to. I am sure
CalPERS has 100 staff that are advising their investment
office. They are looking at it independently, and they are not
looking at what somebody else does. They are looking--
Mr. Bishop. According to the Climate Action 100+ work plan,
what I read is that Climate Action 100+ was, quote,
Designed to harness the collective influence of its investor
members in order to spur companies on the Climate Action 100
Focus List of 170 disfavored companies to accelerate their
emissions reductions.
Is that right?
Ms. Lubber. If there's a financial risk to those emissions
reductions, that's right. Everything about the analysis of
companies and investors is about there is a financial risk.
Mr. Bishop. OK. So, it further says that the initiative's
goal is for, quote,
All companies on the focus list to have committed to net zero
or gone out of business as investors are no longer providing
them with capital.
Ms. Lubber. Yes, I--
Mr. Bishop. Does that sounds coercive to me; does it sound
coercive to you?
Ms. Lubber. It does not sound coercive to me.
Mr. Bishop. You ever heard the phrase in the movies, it's a
nice little business; it'd be a shame if something were to
happen to it? Isn't that kind of the same thing?
Ms. Lubber. In fact, it is the opposite. The requests of
the investors of companies are more disclosure, is adequate,
appropriate information for consumers, for people investing--
Mr. Bishop. How many companies have left the Climate Action
100+ in the past six months?
Ms. Lubber. I'm sorry, how many companies--
Mr. Bishop. How many companies had left?
Ms. Lubber. I believe about a dozen. I don't have the exact
number.
Mr. Bishop. Ms. Lamb, you wrote an update to your investors
in January 2021, didn't you, that says,
The 117th Congress is the most diverse yet; equality is on the
investor and corporate agenda, and the Black Lives Matter
movement defined 2020 alongside a global pandemic. And here we
are facing a second civil war, this one cultural, led by a pro-
White, pro-Christian agenda; in other words, make America Great
Again.
Did you write those words?
Ms. Lamb. That was a newsletter I wrote following the
violent insurrection on the Capitol.
Mr. Bishop. Do you think we're facing a civil war?
Ms. Lamb. The context of that writing was around culture.
Mr. Bishop. Do you think we're facing a civil war, ma'am?
Will you answer that question?
Ms. Lamb. From my perspective, we are pro-equality, pro-
diversity, and pro-religious freedom.
Mr. Bishop. So, you won't answer my question whether you
think we're facing a civil war?
Ms. Lamb. I'm sorry, what I was describing in that piece
reacting to the current events was around culture.
Mr. Bishop. I'll ask you one more time, ma'am. Do you think
we're facing a civil war?
Ms. Lamb. I don't think we're facing a civil war.
Mr. Bishop. Thank you, ma'am. I yield back.
Mr. Massie. The gentleman's time is expired.
I now recognize the gentlelady from Pennsylvania, Ms.
Scanlon.
Ms. Scanlon. Thank you, Mr. Chair.
We know that many industries across our economy are
dominated by a few big players, and as we've seen in recent
years, some of these dominant firms have used their size to
raise prices and reap record returns, whether in the oil and
gas industry, groceries, or medical care owned by private
equity firms.
I've been encouraged by the enduring bipartisan support on
this Committee to pursue antitrust reforms to address those
anticompetitive influences. Instead of focusing on those
reforms to promote competition, we have a hearing here where,
once again, Republicans are wasting the Committee's time and
taxpayer dollars on their culture war against climate change
and targeting responsible investing.
Let's be clear about what's going on here. As we've heard,
there is no illegal collusion by these investors. It's just a
made-up controversy so our colleagues across the aisle can
complain about climate change. We know that House Republicans
are for free markets until you invest in something they don't
like; they support personal freedoms until you do something
they don't like; they support free speech until you say
something they don't like; and they support law and order until
you arrest or convict someone that they do like.
So, the plain truth here is that climate change is real.
Fund managers have proven over and over that ESG factors are
part of prudent investment decisions. They help to maximize
returns and minimize risk. Right now, climate change is having
a material impact on insurance markets, and insurance has to
revamp their risk models. I don't think anyone has ever accused
actuaries of being woke--until today, perhaps.
As we're seeing, climate change is starting to impact
nearly every major sector of our economy. Because of real
climate change risks and the damage that they bring, it's
become difficult and expensive to get new home insurance plans
in Florida and California. When people save for retirement, to
start a family, or send a kid to school, they're thinking far
into the future. They're saving for 10-40 years into the
future.
The same thing goes for our large institutional investors'
retirement funds and pension funds who have to provide future
benefits and make responsible decisions considering all the
factors for their investors and retirees. So, it's not just
reasonable, it's necessary that people want to consider climate
risks when making these savings decisions.
Mr. Bienvenue, CalPERS is responsible for pension benefits
for over 1.5 million Californians, right?
Mr. Bienvenue. That is correct, 2.2 million members of
beneficiaries.
Ms. Scanlon. OK, OK. Do you have any sense of how many of
the retirement plan participants will start receiving benefits
after 2050, one of our climate change goals?
Mr. Bienvenue. Well, frankly, we believe that we are going
to be paying pensions for out to 2050, out to 2100 and beyond.
We're a perpetuity that manages pensions for the current
retirees, for people like me that are current active members,
and then people like my daughter's friend just joined the fire
department, and when he retires, it'll be after 2050, but when
he retires, we'll be paying his pension also.
Ms. Scanlon. OK. Can you, in plain English, give a little
bit of an explanation about how climate risks can pose a threat
to future retirees?
Mr. Bienvenue. Corporate history is littered with places
where companies have taken short-term looks at generating
short-term profits at the expense of long-term risks, whether
that was legal risk, whether that was externalities, you name
it. That has happened throughout corporate history. We want to
make sure that the companies that we invest in are not only
focused on generating profits today, in this quarter, those pay
our pensions now, but also in generating profits in 20-100
years, because that aligns with our liabilities which are
intergenerational.
Ms. Scanlon. OK. Attorney General Ellison, given the
significant and material climate risks to savings and
retirement, should fiduciaries take climate risk into account
when making investments on behalf of future retirees?
Attorney General Ellison. I think it's the only responsible
way to discharge fiduciary responsibility. I can assure you
that it's the floods, it's the wildfires, it's the droughts
that are informing me and my fellow fiduciaries on the SBI
board, not anything else.
Ms. Scanlon. We've heard accusations that initiatives to
address climate change risks in investing somehow violate
antitrust laws. You've looked at this. You've enforced
antitrust things. Have you seen any actual evidence of
antitrust violations in these responsible, sustainable
investment initiatives?
Attorney General Ellison. Congresswoman, I see antitrust
violations in a whole range of American life, but not here.
This Committee is so important, and I wish that we could talk
about real antitrust threats, but not in this area.
Ms. Scanlon. OK. Mr. Chair, I have a unanimous consent
request. Our Republican colleagues still seem a little confused
about what an agreement means under antitrust laws, so I'd ask
unanimous consent to enter into the record the first page of
the Climate Action 100 Signatory Handbook, which says,
Climate Action 100+ does not require or seek collective
decisionmaking or action with respect to acquiring, holding,
disposing, and/or voting of securities. Signatories are
independent fiduciaries responsible for their own investment in
voting decisions and must always act completely independently
to set their own strategies, policies, and practices based on
their own best interests.
Mr. Massie. Without objection.
Ms. Scanlon. Thank you. I yield back.
Mr. Massie. The gentlelady yields back.
The gentleman from Wisconsin is now recognized for five
minutes.
Mr. Fitzgerald. Ms. Lubber, in your 2022 Annual Report you
boasted that one of your key impacts for the year was being
able to claim $62 trillion in assets under management by your
members. That's a significant share of the investment market.
Wouldn't you agree?
Ms. Lubber. Yes.
Mr. Fitzgerald. Ceres has signed the Net-Zero Asset
Managers Agreement. By signing onto that effort, your company
has agreed to coordinate with over 300 other financial
institutions to accelerate the transition toward global net-
zero emissions. Would you say that Ceres and its investor
networks work together toward this shared goal?
Ms. Lubber. We share information. Every asset manager who's
part of the net-zero asset manager enterprise has their own
goals, they're all different, and they all do it independently.
Mr. Fitzgerald. You do that through communication with
institutional investors, proxy adviser firms, and other
shareholders, correct?
Ms. Lubber. We share information.
Mr. Fitzgerald. So, in other words, you collaborate with
members of your investor network, correct?
Ms. Lubber. Collaborate by some definition, yes, not as
it's been leading to meaning something else. We work with a
number of investors who look for information, background, and
facts on the financial implications of climate change.
Mr. Fitzgerald. You're aware that collaboration reduce--and
you just said limited collaboration, whatever it might be, the
reduced production isn't a violation of antitrust law.
Ms. Lubber. Yes.
Mr. Fitzgerald. Why is this different?
Ms. Lubber. We are not making decisions for anyone. We are
not bringing people together to make joint decisions. We are
sharing information on the financial risk of climate, whether
it's $95 billion to the U.S. economy, to the insurance sector.
That's our role.
Mr. Fitzgerald. Are there repercussions for signatories who
fail to abide by their commitments?
Ms. Lubber. There are not.
Mr. Fitzgerald. So, according to this Committee's interim
staff report, if a company like BlackRock were not living up to
its commitments, asset owners could decide to move their money
elsewhere to be managed, which could mean billions of dollars
in lost revenue to BlackRock.
Ms. Lubber. Well, the only thing I've seen along those
lines is the State of Texas pulling billions of dollars out of
BlackRock who's managing their funds, which is having a
negative impact on the taxpayers of Texas. We have not caused--
Mr. Fitzgerald. So, what you're saying is--has Ceres or any
of its affiliates taken any retaliatory action against a
signatory for failure to abide by the commitment?
Ms. Lubber. Absolutely not. Emphatically, no.
Mr. Fitzgerald. Ms. Lamb, Arjuna publicly advertises
divestments from oil and gas, the firearms industry, and other
industries it deems controversial. Arjuna has also joined
initiatives that pressure companies and clients to align with
its values. For example, Arjuna previously submitted a
shareholder proposal to Exxon asking them to accelerate the
reduction of greenhouse gas emissions and to disclose new
plans, targets, and timetables for their reductions. Is that
correct?
Ms. Lamb. Prior to this hearing, my counsel sent a letter
to Chair Jordan and Chair Massie, and had conversations with
both counsel for the Majority and Counsel for the Minority,
regarding the fact I will not be answering questions about the
litigation between Arjuna Capital and Exxon.
Mr. Fitzgerald. So, when you ask that they accelerate the
reduction of CHG emissions, you're asking them to reduce
production of oil and gas. Isn't that correct?
Ms. Lamb. Prior to this hearing, my counsel sent a letter
to Chair Jordan and Chair Massie, and had conversations with
both counsel for the Majority and Counsel for the Minority,
regarding the fact I will not be answering questions--
Mr. Fitzgerald. I'm not sure how answering these questions
could get you in any hot water.
When you say that Exxon should shrink, do you stand by that
statement? You want Exxon to be a smaller corporation?
Ms. Lamb. Prior to this hearing, my counsel sent a letter
to Chair Jordan and Chair Massie, and had conversations with
both counsel for the Majority and the Minority, regarding the
fact I will not be answering questions about the litigation
between Arjuna Capital and Exxon. As previously stated, and on
the advice of counsel, I'm unable to answer any questions
related to the litigation. I'm happy to answer questions--
Mr. Fitzgerald. Very good. I'll take that as a yes.
Mr. Bienvenue, Climate Action 100+ frequently flags key
shareholder proposals and management votes for its members to
signal priority initiatives. Votes flagged by Climate Action
100 then, typically, get the attention of the foreign-owned
proxy advisory duopolity of Institutional Shareholder Services,
ISS, and Glass, Lewis & Company, which have combined 90 percent
market share or advise mutual funds controlling $27 trillion in
assets.
In 2021, a foreign entity completed an 81 percent majority
stake acquisition of ISS. Since that acquisition, ISS has
persistently used its substantial market power to push American
companies to reduce their greenhouse gas emissions in line with
net-zero goals of the Paris Agreement.
Let me just ask, does CalPERS consider whether
recommendations from foreign-owned proxy advisers are in the
best interest, not only of shareholders, but the U.S. national
security?
Mr. Bienvenue. CalPERS considers a myriad of topics when we
think about how to vote our proxies. We take that very
seriously. That's a very important part of what we do every
day, and we have a mosaic where we consider many, many
different sources of information and then put it all together
in a mosaic and make a decision on what's in the best interest
of our beneficiaries and our pension, and it is only that north
star about what's in the best interest of investment returns.
Mr. Fitzgerald. Thank you, and I yield back.
Mr. Massie. The gentleman yields back.
The Ranking Member is now recognized.
Mr. Correa. Thank you, Mr. Chair.
I want to ask for unanimous consent to enter into the
record The New York Times article published August 10, 2023,
titled, ``How Climate Change Turned Lush Hawaii Into a
Tinderbox.''
Mr. Chair, I ask unanimous consent to enter into the record
an NBC News article published August 10, 2023, titled,
``Drought and wind: How Maui's wildfires turned into tragedy.''
Finally, Mr. Chair, I ask consent to enter into the record
a KUT.org article published in December 2023, titled, ``Energy
officials warn of winter blackout risks in Texas and beyond.''
Mr. Massie. Without objection.
Mr. Correa. Thank you.
Mr. Massie. The gentleman from California is now recognized
for five minutes.
Mr. Swalwell. I'm trying to understand why we are here.
Ms. Lubber, do you make money for the people who work with
you?
Ms. Lubber. Do I make money from people--
Mr. Swalwell. Do you make money for the people who work
with you? Are you helping them make money, a return on their
investment?
Ms. Lubber. Indirectly. We certainly do an analysis of
financial risks of climate change.
Mr. Swalwell. Ms. Lamb, do you help the people that--your
clients make money?
Ms. Lamb. Absolutely.
Mr. Swalwell. Mr. Bienvenue, do you help the people who are
in your pension fund make money?
Mr. Bienvenue. Absolutely. Over 20-30 years our returns are
in the 6- and 7-plus percent range in line with our assumed
rate of return.
Mr. Swalwell. Mr. Bienvenue, are you fireable, meaning, if
you don't make money, can the people you work for get rid of
you?
Mr. Bienvenue. Absolutely.
Mr. Swalwell. Ms. Lamb, are you fireable, if you don't make
money?
Ms. Lamb. Absolutely.
Mr. Swalwell. Ms. Lubber, if you're not providing advice
that helps people make money, can they get rid of you?
Ms. Lubber. Absolutely.
Mr. Swalwell. I don't understand why we're here, because
for the longest time, as long as I've been alive, and I'm the
son of two Republicans so I've heard this in my household a
lot, you're the party of free markets. You believe that
Democrats regulate too much, but you've hauled these three here
to tell them you don't like how they're investing in the free
market? You don't like how women make decisions about their
bodies, and so you're banning abortions. You don't like how
families make decisions to get pregnant, so you're banning IVF.
Now, you don't like when businesses invest in climate projects.
By the way, it's a little bit ironic, because you have done
nothing, as long as I've been in Congress, to mitigate against
climate chaos. You've contributed by doing nothing to make the
risks higher. These folks go out and in their own investments
mitigate against the risk, make money for the people who work
for them, and now you're saying they shouldn't do that.
I want to talk a little bit about CalPERS, because as I was
reading, Mr. Bienvenue, in the 2022-2023 year CalPERS returned
6.1 percent. Is that about right?
Mr. Bienvenue. That sounds about right.
Mr. Swalwell. Did you know that the largest pension fund in
the State of Texas is the Teacher Retirement Fund of Texas?
Mr. Bienvenue. I believe that's right.
Mr. Swalwell. Do you have any idea what they returned for
their pensioners with an anti-ESG approach in their investing?
Mr. Bienvenue. Candidly, I don't. We focus on our own fund,
and our own liabilities in everything that we do. Our
liabilities are different from others, and we focus on our
fund.
Mr. Swalwell. It is 3.85 percent. So, everything is bigger
in Texas, except the return on their pension fund because of
their anti-ESG policies. Maybe they should be listening more to
you and your strategies, Mr. Bienvenue.
I also want to just ask Mr. Bienvenue, because I've heard
all these allegations that you all make up a climate cartel.
Who are the people in your fund, Mr. Bienvenue? Like, who are
the pensioners? Where do they come from?
Mr. Bienvenue. It's the hardworking firefighters, police
officers, and public servants in the State of California.
Mr. Swalwell. What are some of the other jobs?
Mr. Bienvenue. It's people that work at schools, not the
teachers but the people that work at the schools.
Mr. Swalwell. Janitors?
Mr. Bienvenue. Janitors, corrections officers, and people
that work at the various State departments around the
organization. By the way, I'm a pensioner.
Mr. Swalwell. Right. So, you and firefighters and police
officers and janitors and hardworking correctional officers in
California, and Ms. Lamb, who, as a woman, goes into
essentially the lion's den of a male-dominated finance
industry, starts her own business, and you all make up a
climate cartel that's going to take down the oil companies? Am
I tracking that right for my colleagues? If anyone wants to
jump in here.
Their lack of jumping in reflects the absurdity of the
allegation.
I yield back.
Mr. Massie. The gentleman yields back.
I now recognize Mr. Van Drew for five minutes.
Mr. Van Drew. Thank you, Chair.
Mr. Bienvenue, so we just discussed that there's a lot of
good, hardworking Americans that rely on you all to make sure
that they get a good investment so they can educate their kids,
so that they can retire when they want to, so that they maybe
can go on a vacation, and do the simple things in life.
I'm a simple country dentist. We've got a lot of smart
people up here. I hope I'm at least half as smart. I just want
to ask some simple questions. What's your job? What is your
responsibility? If you were to say it to me in one sentence,
what is your job?
Mr. Bienvenue. My job is to take $500 billion and expose it
to a set of investment risks across asset class to earn
something like a 6-7 percent return over generations.
Mr. Van Drew. Is your job to get the maximum return on
investment?
Mr. Bienvenue. My job is to get return per unit of risk.
We're very risk-focused also, but, yes, return per unit of risk
is critical.
Mr. Van Drew. Yes. So, let me--yes. To safely--let me put
it in plain English, to safely get the maximum return on
investment. Is that your job?
Mr. Bienvenue. In investment terms it's about maximizing
our Sharpe ratio, which is the highest numerator and the lesser
denominator.
Mr. Van Drew. So, if it became clear to you that for those
firefighters, teachers, janitors, and everyone else that you
could get maximum return on investment safely by investing in a
fossil fuel company, would you?
Mr. Bienvenue. We are invested in fossil fuel companies.
It's part of a diversified portfolio for us, so, yes, anything
that will generate returns to pay benefits--
Mr. Van Drew. Would you encourage that, though?
Mr. Bienvenue. We are all about generating returns--
Mr. Van Drew. Or would you try to change the focus of that
company? Would you have meetings and shareholder resolutions,
etc., to replace the Boards of Directors?
Mr. Bienvenue. We want every company that we invest in to
be sustainable and to generate profits now, but they must
generate profits 20 years from now and 40 years from now.
Mr. Van Drew. If you had two companies and one of them
offered a lower return of investment for those firefighters,
teachers, janitors, etc., and one was a climate-based company,
a wind turbine company, like Orsted, for example--I don't know
if you're--are you invested in Orsted?
Mr. Bienvenue. I'm not sure. We own 10,000 securities
across--
Mr. Van Drew. OK. It's a big one. It's a big Danish company
with wind turbines. You're invested in some wind, I would
imagine. Am I correct?
Mr. Bienvenue. We are.
Mr. Van Drew. OK. You know that wind requires
subsidization. You have to subsidize wind. Even with the
billions on billions of dollars, of tax dollars of those
firefighters, teachers, and janitors, their money going into
subsidize these foreign companies, they've been having a really
tough time and not really returning on investment. Are you
aware of that?
Mr. Bienvenue. As I say, every decision that we make when
we invest is about generating long-term returns to pay
pensions.
Mr. Van Drew. So, you're good. Man, you're good. Seriously.
I'm asking you a specific question. If you had a company that
was faith-based and you could invest in that and it gave a good
return as opposed to a company that fits into more of your
values, what would you do?
Mr. Bienvenue. Every investment is about how it fits into
that large 10,000-plus security portfolio and how that
portfolio can generate returns to pay pensions, and every
decision we make is through that lens.
Mr. Van Drew. So, Climate Action 100 recently lost the
backing of BlackRock, State Street, JPMorgan management in a
combined total of $14 trillion--$14 trillion. Has that
departure made you be retrospective at all, introspective? Has
it made you think those are big dogs, they matter? Again,
whether we love them all the time or not, good return on
investment, a lot of people, firefighters, teachers, and
janitors that you mentioned.
The point I want to make here is, honestly--and when I say
that you're good, you're a good speaker, and you're good at
evading the question, respectfully. The bottom line is that I
think because of a social agenda that you all have, you're
giving up the return on investment that you could have because
you're trying to socially change the country. That's not your
job. Your job is to help these people get that maximum return
on investments. It isn't to change America as we know it.
Climate change and the decisions that we made, that's up to
the U.S. Congress. That's up to the House, the Senate, and the
President, however you feel about it. It's not up to you all.
It's not up to you to do that. I know that you think that by
leveraging money--and you have a great deal of it--you can do
that, but that's wrong.
If you really care about those people that my friend from
California mentioned, if you really care about all those
hardworking Americans who are breaking their back every day,
who are relying on you for investments to do the very best you
possibly can for them, you're falling short, in my opinion.
With that, I yield back.
Mr. Massie. The gentleman yields back.
The gentleman from Georgia is now recognized for five
minutes.
Mr. Johnson. Thank you.
Mr. Chair, I ask unanimous consent to enter into the record
two news articles. The first article, which was published just
three days ago by The Guardian, titled, ``Far right fossil fuel
company allies pressure U.S. Supreme Court to shield firms in
unprecedented campaign,'' reports that groups linked to Leonard
Leo, including the Judicial Crisis Network, Alliance for
Consumers, and the Republican Attorney Generals Association,
are pressing the Supreme Court to intervene in lawsuits against
fossil fuel companies regarding their alleged decades-long
effort to sow doubt about the dangers of burning fossil fuels
that could cost billions of dollars.
The second article is a Wall Street Journal piece published
on February 26, 2023, titled, quote, ``Conservatives Have a New
Rallying Cry: Down With ESG,'' which explains that groups in
Leonard Leo's dark money network, including Consumers'
Research, CRC Advisors, and Marble Freedom Trust, have also
played a major role in dark money efforts to push anti-ESG
messaging and legislation. This article also contains a
relevant quote from Mr. Leo, which is,
The ESG movement is polluting our culture and assaulting the
dignity and worth of people. Our enterprise stands with a
growing group of Americans who are fighting to crush leftist
dominance in this area.
Along with these articles are the following articles:
``Dark Money Group Weaponizes State Treasurers in Attacks'';
``State Attorneys General Join Anti-ESG Effort'';
``Conservatives Have a New Rallying Cry: Down With ESG''; and
``Far-right fossil fuel company allies pressure U.S. Supreme
Court to shield firms in unprecedented campaign.''
Also, last but not least, Mr. Chair, I ask unanimous
consent to enter into the record two reports from Investigative
Watchdog Documented, ``State AGs Join Anti-ESG Effort, Amid
Growing Backlash,'' which was published July 2, 2023, which
demonstrates that dark money and political groups are working
with State Attorneys Generals to attack ESG investing; and
``Dark Money Group Weaponizes State Treasurers in Attacks on
Climate Policy'' which was published August 5, 2022, which
reports that the State Financial Officers Foundation, a
501(c)(3) organization, is a key coordinator of attacks on ESG
investing by GOP State Financial Officers.
Mr. Massie. Without objection.
Mr. Johnson. Thank you, Mr. Chair.
Mr. Massie. Were those all unanimous consent requests?
Mr. Johnson. Yes.
Mr. Massie. Does the gentleman need five minutes now?
Mr. Johnson. Yes, I do.
Mr. Massie. OK. Please put five minutes on the clock.
Mr. Johnson. Thank you, Mr. Chair.
We're here because MAGA Republicans are doing the bidding
of dark money groups with ties to former Trump Administration
officials, the oil and gas industry, and far-right donors like
Leonard Leo and the Koch brothers. There is no antitrust issue
here. Investors simply realized that responsible investing was
good for their pocketbooks.
Extreme weather events threaten corporations' assets and
commercial dealings, and it is just good business to consider
things climate-related risks. That scared the oil and gas
industry and they started funneling millions and millions of
dollars into preventing shareholders and companies from looking
at the effects of climate change on their business.
Leonard Leo of the Federalist Society called this a very
high priority and said he was a part of a movement to crush--
quote, ``crush leftist dominance in this arena.'' MAGA
Republicans put profits over people and picked up the playbook
of the industry funded dark money groups like the Texas Public
Policy Foundation, which is a climate-denying nonprofit funded
by the Koch brothers' network and big oil companies like Exxon
and Chevron.
At the urging of these dark money groups, MAGA Republicans
subjected any responsible investing groups to expensive and
time-consuming investigations and publicly smeared them, trying
to bully them to get them to scale back their responsible
investing commitments. Americans cannot let dark money from the
oil and gas industry shield free speech and stop us from
working to protect ourselves from climate change. As I
mentioned, the legal theories that Republicans are advancing in
this investigation are from a paper sponsored by a dark money
group called Texas Public Policy Foundation, which takes money
from the Koch brothers and big oil companies like Exxon and
Chevron.
Attorney General Ellison, do you think that this Committee
should take legal theories that are funded by Big Oil at face
value?
Attorney General Ellison. Absolutely not. I can tell you
that in Minnesota we posted returns of 8.9 percent, and we do
employ ESG principles. So, in terms of the success, I think
your point is very well taken.
Mr. Johnson. Thank you.
Ms. Lubber, why do you think Big Oil is so desperate to
stop your work that they'll secretly fund phony legal theories
and try to smear you?
Ms. Lubber. Well, I can't speak for them, but it is a
complicated industry that's creating a problem that's causing a
financial crisis or a financial problem for every sector of the
economy. Now, the fossil fuel industry, oil and gas has been
subsidized and still has extraordinary subsidies, but science
is telling us that won't last forever, that the product of
those companies is creating financial, environmental,
scientific problems for every sector of our economy, and so
they are under the microscope.
Nobody, there is no investor who we work with who says they
want the company to fail. They own the company. CalPERS owns
every oil and gas company. They want them to prevail, but to
transition, to look at the science we're all facing and the
cost to the economy of every sector, and to start transitioning
away from fossil fuels, or finding a way to bury the problem
they're creating, of which nobody has found.
Their product is creating--if you're the fashion industry
and you were just told that your cotton crop had died due to
climactic changes, drought or too much water--
Mr. Johnson. Yes, you would make some changes that were in
the best interest of the business and you would move forward.
Ms. Lubber. That's right. So. every sector has to look at
what is their risk and how to start transitioning. That's
what's being asked of them, not to go away, but to divest
immediately.
Mr. Johnson. They've got the capital to invest in the new
technology of the 21st century green renewables.
Ms. Lubber. They have the capital. They still have the
subsidies that perhaps are not afforded to the new technologies
of our future.
Mr. Johnson. Amidst record profits.
Ms. Lubber. Correct.
Mr. Johnson. Thank you.
The Republicans keep talking about a cartel. I'm not sure
that they know what that word means.
Attorney General Ellison, OPEC is a cartel, right?
Attorney General Ellison. Absolutely it is.
Mr. Johnson. That means it controls the price and supply of
oil, correct?
Attorney General Ellison. That's right.
Mr. Johnson. Why do you think--who do you think plays a
bigger role in the supply of oil and the prices Americans pay
at the pump, OPEC or the folks seated at the witness table with
you?
Attorney General Ellison. Obviously, and clearly, OPEC, and
I believe that collusion or allegations of collusion with some
oil executives with OPEC is under some investigation right now.
Mr. Johnson. Thank you.
With that, I yield back.
Mr. Massie. The gentleman yields back.
I now recognize myself for five minutes.
I'm trying to understand what ESG--what goes into an ESG
score. Mr. Bienvenue, are you aware that last year SMP Global
gave Tesla an ESG rating of 37 out of 100, while at the same
time giving Philip Morris a rating of 84 out of 100? Are you
familiar with that?
Mr. Bienvenue. I'm not aware of that. I will tell you that
for us, ESG ratings are part of the mosaic and the investment
decision that we make, because it's critical for us that we
consider all those topics.
Mr. Massie. So, you would consider this in your
investments, these ESG ratings?
Mr. Bienvenue. We consider every information that we can
get in our investments. More information is better for the
investor.
Mr. Massie. So, shouldn't you know what's behind the fact
that Tesla got less than 40 and a tobacco company got more than
80? Would that cause you to invest in the tobacco company over
an electric car company?
Mr. Bienvenue. As I said, every investment decision we make
is a mosaic of hundreds and thousands of factors.
Mr. Massie. You're testifying today you have no idea how
Tesla got half the score that a tobacco company got? Do you
know what goes into these ratings?
Mr. Bienvenue. As I said previously, we own 10,000
companies, and each one has--
Mr. Massie. Do you own Tesla or Philip Morris?
Mr. Bienvenue. We own Tesla.
Mr. Massie. Do you have any Philip Morris?
Mr. Bienvenue. We do not have any Philip Morris.
Mr. Massie. OK. I wish you could explain to us today why
Tesla has an ESG rating of 37, Philip Morris had 84 last year.
Attorney General Ellison, if three airline companies got
together and decided--let's say the management of the airline
companies--and decided to reduce flights or to get rid of their
frequent flyer program, would that be collusion? Would you
pursue that?
Attorney General Ellison. Well, let me tell you, there's a
lot of things that go into any antitrust case, and so just to
answer your question with only what you've asked, I'd say I'd
need to investigate more. Just on the bear bones of what you
asked, it would get our interest.
Mr. Massie. It would get your interest. What if instead of
the companies their investors did this, or a shell company that
all three of the airlines were a part of suggested to all three
companies that they should reduce flights?
Attorney General Ellison. Well, there I can't go with you
because the only thing that--if you're talking about the folks
assembled here and other groups that give information to
companies, those companies are making independent decisions and
making decisions on the interest of the people who they
represent, whether they be shareholders or whether they be
pension fund beneficiaries.
Mr. Massie. Thank you. I'm glad in the first interest--in
the first instance it would get your interest up, because
that's why we're having the hearing here. We see evidence that
these groups of investors has conspired, collaborated,
colluded, convened, whatever you want to call it, it's still
pretty much the same thing, to reduce the outputs of their
companies or the companies that they target.
Ms. Lubber, you said that mainly what you all advocate for
is disclosure, but don't you also try to get the companies to
do things?
Ms. Lubber. We're interested in the companies taking
positions that allow them to be strong and profitable in the
short, medium, and long term. Every discussion, whether it's
with an auto company, looks at where's the market going as it
relates to EVs, not just combustion engine vehicles.
Mr. Massie. Well, here's the problem we have. What is
demand management? Does somebody want to tell me what demand
management is?
Nobody jumped on that, so it's in all your documents,
demand management. It's kind of the go-to thing to reduce. When
you've discovered that the technology isn't there yet to reduce
the emissions and keep the production the same, you suggest in
the documents that the companies--here's a document called
investor actions to align the aviation sector with the IEA's
1.5-degree decarbonization pathway. It suggests that the
aviation companies themselves could manage demand by raising
their prices.
Now, the problem here is that this is coordination. You
guys are putting these documents together, you're sending them
to everybody, you're collaborating on the documents, and then
you're going to the companies that you've invested in and
saying you should do this. We know the technology's not there.
Here's some of the suggestions for the airline companies:
Keeping business travel to 2019 levels, capping long-haul
flights for leisure at 2019 levels, and reducing total flights
by 12 percent. These are in the documents that you send to your
members, and, again, you call it demand management.
What I would say is, that if we saw anybody else doing this
for any other reason, the fact that you think you have a noble
reason isn't enough to get you around the law. It's not because
what you're doing ends up raising prices, reducing production,
and it's not good for society, and it's not--in many cases, not
good for the firms you're investing in, and that's why we're
having this hearing today.
I see that my time is expired. Attorney General Ellison, I
understand you need to leave?
Attorney General Ellison. Unfortunately.
Mr. Massie. I appreciate you coming. You probably never
want to come back here again, I would say.
Attorney General Ellison. No.
Mr. Massie. Congratulations on your new job, and thank you
for participating today.
Attorney General Ellison. May I just thank you, Mr. Chair
and Ranking Member, for your hospitality today. I am always
happy to help advance the legislative process in whatever way I
can. So, thank you very much.
Mr. Massie. We appreciate your time.
If the other witnesses will stay, that would be good,
because we have a few more folks who want to ask questions.
I will now--let's see, we've got--oh, the gentlelady from
Vermont is recognized for five minutes.
Ms. Balint. Thank you, Mr. Chair.
Thank you all for being here.
I just want to start by saying, I'm really sorry that
you've had to witness some of this. It's, frankly, embarrassing
at moments. Cue the diabolical music: Isn't it true that you
believe that climate change is real? Isn't it true that you
believe we should reduce our carbon footprint? It's absurd that
we're even having this conversation.
I represent Vermont, and a year ago we had catastrophic
flooding in Vermont that we're still digging out of. It
destroyed basically every small business in the downtown of our
capital, from one end of the State to another. We are still
dealing with claims to FEMA, still dealing with insurance
claims.
I can tell you, it really doesn't matter whether you're
talking to a Democrat or a Republican; Vermonters know climate
change is real, and we are feeling it in all our downtowns
because the water runs downward. Even small rainstorms turn
into catastrophic flooding for us, and it's happening more and
more. So, again, I'm sorry that you have to sit through this.
I want to turn to another issue that I think is incredibly
important, that I don't want to get lost here, which we talked
about pensions. So, I receive a pension in Vermont. Before I
was a lawmaker, I was a public school teacher, and I understand
really well that many teachers dedicate their entire lives to
the future. I always say, as a middle school teacher, you can't
teach middle school unless you believe in the possibility of
change, and you believe that there is possibility and promise
on the horizon.
So, as teachers, we're focused toward the future. It's only
logical that we would want our investments to be focused on
that same thing: Stability for the future so that when we
retire, there will actually be a floor, essentially, so that we
can live lives of dignity in retirement. This topic is so
important because it goes directly to the heart of it, which
is, will hardworking people have the money that they need to
retire with dignity? We're talking about long-term
sustainability.
As we talked about earlier, it's teachers, it's janitors,
and it's all our frontline workers. If Congress doesn't allow
money managers to make responsible investments now, then we'll
see a poorer and darker future for all those people. So, it's
absurd that we sit here.
You are here as responsible investment managers, right, and
your job is to make sure that you evaluate risk on behalf of
your client. That's why they hired you. That's why they invest
their money there. Nobody is forcing them to do this. This is
where the market has led us.
If a firm wants to attract investment by demanding that
it's thinking about the next--demonstrating, excuse me, that
it's thinking about the future, the next quarter century not
just the next quarter, and we should respect that. We should be
supporting that, right. We should get the hell out of the way,
honestly, and not drag you before Congress for this
ridiculousness here.
As has been mentioned before, my Republican colleagues who
are usually so in favor of letting market forces work would
second-guess the investment decisions that you're making
because they don't align with their world view. So, they've
constructed, once again, a dynamic involving a culture war
conspiracy theory around investing, responsible investing.
We talked about the returns. You're getting great returns.
Isn't that what we're supposed to be talking about here,
investing responsibly so people can live with a life of dignity
later on? So, what are we doing here? We're wasting time, once
again, in this Committee, not talking about the issues that
absolutely impact working people day in and day out.
So, I just want to go back to basics here. Let's go to each
witness here. Let's get to the heart of it. This entire hearing
is premised on the idea that responsible investment initiatives
somehow require companies to make investment decisions that are
in violation of antitrust laws. So, to each of you, do
responsible investing initiatives include binding agreements
between companies to make certain investment decisions? Yes or
no. We'll start with Mr. Bienvenue.
Mr. Bienvenue. On behalf of CalPERS, we make every decision
independently, and it's about generating returns to pay
pensions consistent with our fiduciary duty.
Ms. Balint. Ms. Lamb?
Ms. Lamb. Can you repeat the question?
Ms. Balint. I want to know, do responsible investing
initiatives include binding agreements between companies to
make certain investment decisions?
Ms. Lamb. Absolutely not.
Ms. Balint. Ms. Lubber?
Ms. Lubber. Absolutely not.
Ms. Balint. So, again, what are we doing here? I sit in
here day in and day out and I wonder, who's standing up for the
little guy? Who's standing up for the little guy?
Mr. Chair, before I yield back, I would like to introduce
for the record the report of the Democratic staff of the House
Judiciary Committee on this investigation, which, unlike the
Republican staff report, contains an antitrust legal analysis
section reviewing the evidence and concluding that no antitrust
violations have been proven here. I ask unanimous consent.
Mr. Massie. Without objection.
The gentleman from California is recognized for an
unanimous consent.
Mr. Correa. Thank you, Mr. Chair. I ask unanimous consent
to enter into the record a page from Delta's 2024 Annual Report
that says that climate change affects the airline's business.
Mr. Massie. Without objection.
I'll now recognize the gentleman from Virginia for five
minutes.
Mr. Cline. Thank you, Mr. Chair.
I think what we just heard and what we've heard from
Democrats and what we've heard from the left almost
consistently is that the ends justify the means, that climate
is a problem so we're going to overlook anticompetitive
collusive behavior. We need to get a good return on pensions,
so we're going to ignore evidence of violations of antitrust
law. The laws are here for a reason, and everyone is obligated
to follow it. Just because you may think yourself to be higher
minded in your pursuit of profits, doesn't give you the right
to ignore the laws.
So, I want to ask Ms. Lubber, because we've been trying to
get information from your organization, and we've been trying--
at first, we requested voluntary cooperation 18 months ago in
producing responsive information relating to your potentially
collusive work to promote ESG-related goals. You failed to
cooperate voluntarily. We were forced to issue a subpoena to
Ceres in June 2023.
In October 2023, you were informed that you had failed to
produce responsive information from the Ceres investor portal,
an internal website that contains responsive information and
communications related to the climate cartel's engagement with
American corporations and other collusive activity. To date,
you still have produced just three spreadsheets of data
exported from the Ceres investor portal, and that information
was provided in an unusable format.
So, as the Chair of the Subcommittee on Responsiveness and
Accountability to Oversight, we have been having hearing after
hearing on the failure of this Administration and of
organizations like yours and failure to respond to our efforts
to ensure oversight on behalf--well, on behalf of the law,
quite frankly.
So, the subpoena, back in June 2023, you recall that,
correct?
Ms. Lubber. Correct.
Mr. Cline. OK. You understand that the subpoena imposes
mandatory legal obligations on you and Ceres, correct?
Ms. Lubber. Correct.
Mr. Cline. You understand that failure to comply with a
Congressional subpoena can be punished with criminal contempt
of Congress, correct?
Ms. Lubber. Correct.
Mr. Cline. All right. The subpoena required you to produce
all responsive information demanded by it, didn't it?
Ms. Lubber. Correct.
Mr. Cline. OK. Are you aware that back in October 2023,
regarding the portal, some four months after the subpoena, your
counsel claimed that they were not familiar with it?
Ms. Lubber. I'm not aware of that. What I will say in
response to what you said is we have turned over 90,000 pages
of documents. We've had--
Mr. Cline. Three spreadsheets.
Ms. Lubber. We've asked--no. Over a period of time over the
last year, we've asked for directions on how to narrow the
subject matter that wasn't forthcoming, and we continue to turn
over documents.
As it relates to the three--the spreadsheet you're talking
about, which I'm not sure I've seen, but I believe I've heard
that spreadsheet has hundreds and hundreds of documents noted
on it. We've asked the Committee to give us more guidelines on
which ones to turn over. Every document that's been asked for
we have turned over.
I truly believe that is a formatting question, and clearly
this Congress has bigger values than formatting. We will go
back to it. Our lawyers will talk to your lawyers. I believe
we've turned over 90,000-plus pages, more than almost anyone in
response and in compliance with your requests.
Mr. Cline. OK. We've asked for full access to the portal.
Why have we not received that?
Ms. Lubber. I actually have no idea.
Mr. Cline. OK. Can you commit to making the portal
available to the Committee today?
Ms. Lubber. I will commit to trying to figure out why it is
or why it's not.
What you do have--documents were requested, and those three
pages with hundreds of notations and documents were included,
and I believe you've got what you've asked for.
Mr. Cline. OK. If the Committee needs to work with you to
get access to the portal, can you provide us with that access?
Ms. Lubber. Well, our lawyers and staff will be talking to
your staff immediately, as we have had every single day or
every single week over the last 15 months.
Mr. Cline. OK.
You haven't certified compliance. Can you tell us why not?
Ms. Lubber. I'm sorry, ``certified compliance''?
Mr. Cline. Well, with the requests for information.
Ms. Lubber. That surprises me. I believe we have. We'll
double-check that. If it's the form that we were asked to sign
and check before this hearing, that's been done. I hope we
could both double-check it, both of our ends, whether that form
was listed. I am certain we have filed that.
Mr. Cline. Holding people in contempt is something that
this Congress is prepared to do. In fact, we're going to do
that today with our Attorney General. We would not want to have
to do that with you as well, so--
Ms. Lubber. I am an honorable citizen, lawyer, and
advocate. We were asked to file a form before the hearing; I am
certain we did. If there is some way it wasn't transmitted
properly, please let us know, and we'll get it to you.
Mr. Cline. Thank you.
Yield back.
Mr. Massie. I thank the gentleman.
I now recognize myself to seek unanimous consent to submit
for the record a document produced by Climate Action 100+, and
at the top it says, ``Investor Actions to Align the Aviation
Sector with the IEA's 1.5 +C Decarbonization Pathway,'' and it
talks about limiting flights and demand management.
With that, I recognize Mr. Ivey for five minutes.
Mr. Ivey. Thank you, Mr. Chair.
Thank you to the panel. I'm sorry I've been gone for so
much of the hearing. We've had parallel hearings and floor
action and other things going on.
I did catch a little bit of it, and one of the things I
caught was one of my Republican colleagues calling you evil,
which I think is astonishing, frankly.
As we were trying to prepare for this hearing--and it's the
Antitrust Subcommittee--one of the things I was trying to
figure out was, what's the antitrust issue?
I caught the Attorney General's testimony at the
questioning of Mr. Correa, and I think it's very clear there's
no antitrust violation here whatsoever. In fact, I don't even
think there's a whiff of it, to tell you the truth. So, I'm a
little surprised that we're focusing our attention on it in
this way.
I've got to say, too, the point that we were just--you all
were just covering--I'm sorry my colleague left, because I'm on
the Subcommittee for this Committee that's doing the same thing
with respect to the Federal Government, which is, complaining
about not getting documents--90,000 pages is an astonishing
amount of document production for a private company.
I don't know how many of my colleagues have been in private
practice and worked with a private company in response to
subpoenas, but a subpoena of that magnitude, I think you could
actually challenge it in court, potentially, as unduly
oppressive.
Now, you've got attorneys; you all do what you follow their
guidance and everything. One of the issues that we had haven't
ironed out here in the Committee with respect to the
Committee's subpoenas to the Administration is, they kind of
struggle with the communications between their staff and the
lawyers who are working on these productions.
What I heard from you was that your attorneys had asked for
direction to the staff and hadn't really gotten what you needed
on that.
We have--I'm saying ``we,'' but it really is my Republican
colleagues--sent out really overbroad document requests, and
subpoenas in some instances, that I think--before you go to
contempt, you should take it to court, which is the normal
process. I think you'd lose in court. If the subpoena for this
one looked like the other ones--
Mr. Issa. Would the gentleman yield?
Mr. Ivey. I would.
Mr. Issa. Just from the standpoint of having been down this
road, we can't go to court without a vote of the Whole House.
That's what gives us a standing to do it. We would look forward
to doing that.
Mr. Ivey. That'll be up to you all. It's as I said with
respect to the Administration and the Attorney General, in
particular, it's been a clear abuse of authority to seek
contempt for for the tape that you're after there. I don't want
to digress.
On this particular point, I want to say this: The climate-
change issue--and I know my Republican colleagues are--many of
them, anyway--somewhat in denial with respect to the fact that
there is climate change, and that the science supports that,
but I do think that the effects are undeniable.
So, some of the things that I've noticed: Like, for
example, in Florida, people who own houses along some parts of
the coast can no longer get insurance for their houses because
of the effects of climate. Insurance companies have to
internalize those costs, because they have a fiduciary
responsibility of their own, as do you, to pay attention to
that. Because if you don't, you're paying for houses that you
can't afford to pay for, because climate changes are having
such a big impact and such frequency of impact that you'd lose
money.
So, the insurance companies are starting to walk away. What
that's going to turn into is individual homeowners who can't
get home insurance then look to the State for help to--once
they get hit by another one of these hurricanes, for support.
The States aren't going to want to do it; Mr. DeSantis isn't
going to want to do that. So, guess what he's going to do? He's
going to come to the Federal Government and ask for a bailout
there too.
That's happening in other places. My colleague from North
Carolina, I saw that, I think it's on the Outer Banks, they've
had, I believe, six houses--I believe these are the beachfront
mansions--that are falling into the ocean because of the rising
sea levels. They're going to start having trouble insuring
those properties as well.
So, we can pretend like there's no issue there, but I think
it's pretty clear from the effects that's obviously the case.
From the standpoint of your fiduciary obligations to your
investors and to the people from your pension, for example--
there's no way that you can ignore that responsibly. You have
to pay attention to it. You have to incorporate it into the
work that you do. It's shocking to me that you're being beaten
up for doing that.
By the way, I think for--well, I'm running out--I'm running
out of time.
Thanks again for coming. I apologize for what I would call
them cheap shots--that have been taken at you today. I
appreciate the fact that you've tried to comply.
I also appreciate the fact that there is zero evidence of
an antitrust violation that I've heard. The attorney general
pointed that out.
I encourage you to keep up the work that you're doing,
because I think it's not only in your pensioners' best
interests and your investors' best interests, but I think it's
in the country's best interests.
With that, I yield back.
Mr. Massie. I recognize the Chair of the Full Committee for
five minutes.
Chair Jordan. To reduce emissions, do you have to reduce
production, Mr. Bienvenue?
Mr. Bienvenue. I'm sorry. Can you repeat the question,
please?
Chair Jordan. To reduce emissions, do you have to reduce
production?
You guys said Climate Action 100--you're all part of this
group. You said your goal is to reduce carbon emissions. You've
got this focus list, 170 companies that you're targeting to
change how they do things. You said, of that 170, one-quarter
of them are oil and gas companies; 42 are oil and gas
companies.
What I want to know is: In order to reduce carbon
emissions, do those 42 companies, oil and gas companies, on the
target list, on the focus list, do they have to reduce
production?
Mr. Bienvenue. I don't think anybody knows how the climate
transition is going to take place, whether that's--
Chair Jordan. That's not what I asked you. Do they have to
reduce production or not?
They're in the business of making oil and gas, producing
oil and gas. I'm asking you, do they have to stop or lower,
decrease, oil and gas production?
Mr. Bienvenue. As I say, I don't think anybody knows how
the climate--
Chair Jordan. Ms. Lamb, what do you think?
Ms. Lamb. I think that the oil and gas industry is facing
enormous headwinds because of global emissions going up so
much, and so I think that those companies are challenged and
are going to have to--
Chair Jordan. I didn't ask if they were challenged. I
didn't ask about headwinds. I asked a simple question. Do you
think they have to reduce production of oil and gas?
Ms. Lamb. I think each company needs to take a look at
their business model and figure out how--
Chair Jordan. So, you don't think that. They can increase
production? You're OK with that?
Ms. Lamb. I think that each oil and gas company need to
look--
Chair Jordan. If a company making their product wants to
make more of the product, are you OK with that?
Ms. Lamb. The product of oil and gas companies is energy,
and they can look and see how they can best produce energy for
their--
Chair Jordan. So, what do you mean? When you've got 42 oil
and gas companies on your focus list and you want to reduce
carbon emissions, are oil and gas companies going to be allowed
to, encouraged, engaged--whatever term you want to use--are
they going to be able to make more oil and gas or less oil and
gas? What do you think they should do?
Ms. Lamb. Oil and gas companies can do whatever they want,
because--
Chair Jordan. Well, then why are they on your focus list?
What are you trying to get them to do?
Ms. Lamb. As investors that consider the financial--
Chair Jordan. Ms. Lubber, will you answer the question?
Because the other two folks won't.
Ms. Lubber. Yes.
Chair Jordan. --think oil and gas companies should be able
to make more oil and gas, or do they have to make less?
Ms. Lubber. They don't necessarily have to make less. Let
me give you an example
Chair Jordan. So, do you guys--all disagree with Mr.
Khanna?
I played Mr. Khanna's clip. Congressman Ro Khanna said to
the CEO of Chevron, ``Are you embarrassed''--I'll read it.
``Are you embarrassed that as American company, your production
is going up?''
Should they be embarrassed because they're producing more--
should an oil and gas company be embarrassed because they're
producing more oil and gas?
Ms. Lubber. So, oil and gas companies should limit their
greenhouse-gas emissions. That doesn't immediately mean they
produce less. Oil and gas companies--
Chair Jordan. Oh. So, does it means later they produce
less?
Ms. Lubber. No. What it means is, they contain their--
Chair Jordan. Are you disagreeing?
Here's the question. Are you disagreeing with Congressman
Khanna, or are you agreeing with him?
Ms. Lubber. Say it--please repeat what he said.
Chair Jordan. He said to the CEO of Chevron, ``Are you
embarrassed, as an American company, that your production is
going up?''
Ms. Lubber. Yes, I don't know--
Chair Jordan. Obviously, wanting the production to go down.
Ms. Lubber. I don't know the context. I do know that oil
and gas--
Chair Jordan. That's the context. He went through all them,
all them, and said, ``Will you pledge to reduce production?''
I'm just asking you guys, as the guys who have 42 oil and
gas companies on your target list, is it OK for oil and gas
companies to actually increase oil and gas production?
Ms. Lubber. If they could decrease their emissions in the
process, I think they would be looked at differently.
Chair Jordan. Uh-huh.
Ms. Lubber. Regardless, so many of the oil and gas
companies have decreased their methane emissions.
Chair Jordan. Anybody recently leave Climate Action 100,
any of your investment members, your member investors? Anyone
recently leave Climate Action 100?
Ms. Lubber. About a dozen.
Chair Jordan. About a dozen?
Ms. Lubber. Yes.
Chair Jordan. Can you name some of those companies?
Ms. Lubber. Sure--
Chair Jordan. Small companies? Big companies? Big
investors? Small investors? Who were they?
Ms. Lubber. Some combination, but I would argue more--and
there were some household names.
I would also say--
Chair Jordan. Some big ones, weren't there?
Ms. Lubber. Yes. BlackRock and--
Chair Jordan. BlackRock's pretty big.
Ms. Lubber. --J.P. Morgan. In both--
Chair Jordan. J.P. Morgan, that's pretty big.
Ms. Lubber. In all those cases--
Chair Jordan. Vanguard?
Ms. Lubber. --Vanguard--they've said they're going to
continue fighting for climate reduction.
Chair Jordan. State Street? PIMCO, right?
[Crosstalk.]
Chair Jordan. --They're some of the biggest investor--asset
managers in the world. They all left your group? Why'd they
leave?
Ms. Lubber. Well, they all have different reasons.
BlackRock has only left partially--
Chair Jordan. Well, they all left at sort of the same time.
There must be something going on here.
Ms. Lubber. They've heard a lot--they've got a lot of
pressure from Congress and others that they should leave.
BlackRock said to us, we're going to continue working--
Chair Jordan. We're not pressuring anybody. We just want to
know what you guys are up to.
Ms. Lubber. Well--
Chair Jordan. Forty-two oil and gas companies on your focus
list, and you can't even tell me if you want production of oil
and gas to go up or down for them.
Ms. Lubber. No. What I have said was that some of them have
increased production but reduced emissions, the greenhouse-gas
emissions--
Chair Jordan. Are you for ending--are you for ending the
internal combustion engine in the next 10 years?
Ms. Lubber. That is the direction that our government is
going, and I think it's the direction that the automakers have
determined makes sense.
Chair Jordan. You agree with that?
Ms. Lubber. Yes.
Chair Jordan. Getting rid of the internal combustion engine
in 10 years?
Ms. Lubber. Yes.
Chair Jordan. Are you for reducing airline flight travel by
12 percent?
Ms. Lubber. I don't know the numbers for airline flights.
Chair Jordan. Do you want it to go down?
Ms. Lubber. Not necessarily--I don't think--
Chair Jordan. What about--what about--
Ms. Lubber. No, no. I don't think the answer--
Chair Jordan. OK. This is the last question, what about
hamburgers? Where do you stand on the hamburgers? Is 1\1/2\ a
week enough, or do we get more?
Ms. Lubber. Our--
Chair Jordan. Chair Massie wants to know. He's got some of
the best grass-fed beef I've ever had.
Ms. Lubber. People should have the freedom of diet.
Chair Jordan. What's that?
Ms. Lubber. I said, people should have freedom of diet.
Chair Jordan. Oh. So, you don't agree with that.
Ms. Lubber. Well, in all cases, there are other ways to try
to fix the challenges. Airlines--
Chair Jordan. Newsflash: Ceres is OK with us eating more
hamburger, Chair.
Ms. Lubber. Eat what you would like.
Chair Jordan. Newsflash: Ceres is OK with that.
Ms. Lubber. Eat what you would like.
Chair Jordan. I yield back.
Mr. Massie. Thank you.
I recognize the gentleman from California.
Mr. Correa. Thank you, Mr. Chair.
I ask unanimous consent to enter into the record an article
from The New York Times, June 7, 2024, noting the difficulty in
getting insurance thanks to climate change, and dangers to
affordable housing thereof, that climate change is affecting
the most vulnerable in our communities.
Mr. Massie. Without objection.
I now recognize the gentleman from California, Mr. Issa,
for five minutes.
Mr. Issa. I thank the Chair.
The Chair of the Full Committee asked a fairly
straightforward question, and I didn't hear an answer. So, I'll
go on to a different question that I'm--hopefully will get
better answers.
How many in this room arrived here with a zero-net
emissions, zero carbon? You didn't walk without breathing. Did
you fly here or drive?
Ms. Lubber. I flew here from Boston.
Mr. Issa. OK. So, would you have gotten here if there was
no petrochemical industry as it is today?
Ms. Lubber. The question--no.
Mr. Issa. Thank you.
Ms. Lamb, how did you get here?
Ms. Lamb. I took a flight at the request of Congress.
Mr. Issa. OK. So, you flew using some of that evil Exxon
oil or bad Chevron JP-4 or whatever it was.
How about you? How did we get here from California?
Mr. Bienvenue. Mr. Issa, like you, I flew here from
California.
Mr. Issa. OK. So, would you all agree that, today, the oil
and gas industry is essential to our very existence, welfare,
and way of life? Today. Are any of you going to disagree with
that? I'll give you the floor if you're going to say, no, we
could shut it off today.
So, knowing that it's essential today--and I'll go to
CalPERS next--you've basically said you're cutting off
investments, period, and encouraging others, through your
process, to cutoff investments with virtually all oil and
natural gas companies, including Chevron, based right in
California, correct?
Mr. Bienvenue. We are still fully invested in the oil and
gas companies that we invest in. It's part of a diversified
portfolio. For us, we won't tell companies how to navigate the
energy transition. When we--
Mr. Issa. Then why are you discouraging others from making
those investments and limiting the available capital for those
companies?
Mr. Bienvenue. Every investor makes their decisions--
Mr. Issa. No, no, no. I'm asking you why you're making
the--look, you're part of what has been, up until now, a very
opaque organization that in fact leverages, pushes, prods,
embarrassed--whatever term you want to use--people to not make
investments in what is currently an essential part of what
makes our life worth living in this country and around the
world.
So, I asked you the question: If it's a good investment,
why is it you're discouraging others?
Mr. Bienvenue. So, CalPERS is one of the most transparent
pension organizations in the world.
Mr. Issa. Oh, you are?
Mr. Bienvenue. We are.
Mr. Issa. Are you invested in any lawsuits in which you
were not disclosed as an investor at the time of the filing of
those lawsuits?
Mr. Bienvenue. I'm an investor, not a lawyer, so I can't
speak to--
Mr. Issa. Well, let me tell you. Your organization has been
actively opposing any kind of third-party litigation
transparency, because you do invest--at least it's been
reported, and we believe it to be true--you do invest in third-
party litigation--in other words, suing people but not wanting
your name on it. Why? Well, because it's profitable, right?
About the profits.
So, I'm going to reiterate: Have you, to the best of your
knowledge, received any revenue as a result of investing in
litigation?
Mr. Bienvenue. Again, I'm not an attorney, but there's--
Mr. Issa. I'm not asking an attorney question. I'm asking
an investor question.
Mr. Bienvenue. There is a third-party--
Mr. Issa. Has CalPERS received any money by investing in
what was--the moneys that were used or a contract which was
used to create litigation on which you profited from a return
if they prevailed?
Mr. Bienvenue. I don't know the answer to that question.
Mr. Issa. OK. So, you run investments, but you don't know
if CalPERS participates?
Let me ask one final question, because Mr. Massie and I
have something in common, which is, we spent our careers in
engineering and a lot less in law, so antitrust is kind of an
acquired knowledge for us.
For each of you: If two or three companies were to share
their prices or their strategy for pricing or how they went to
market with another competitor, would that be an antitrust
violation?
I know, you're not a lawyer.
Mr. Bienvenue. As I said before I'm an investor, not a
lawyer.
Mr. Issa. Thank you. Ms. Lamb or--
Ms. Lamb. I'm not an antitrust expert.
Mr. Issa. Right, but the basic definition that you'd have
to pass the bar with is that sharing information between
competitors inherently puts you in jeopardy of antitrust,
particularly if that information allows, effectively,
coordination of prices or other activities, including
investment activities.
Wouldn't that be true?
Ms. Lamb. I really don't understand the premise of what
you're saying. What we're doing and the reason is, we're
investing our clients' capital for the long term, upholding our
fiduciary duty--
Mr. Issa. Oh, you're investing for the long term. Do you
sell stock on a quarterly or annual basis?
Ms. Lamb. We rebalance our portfolio--
Mr. Issa. OK. So, you buy and sell regularly. So, when you
say ``long term,'' the reality is, you both do long- and short-
term, and if something's a good investment today, you have a
fiduciary obligation to consider it.
So, I'm going to close with this, Mr. Chair. Everyone talks
about risk. There is zero risk today in investing in the oil
and natural gas industry. There's zero risk. Because for the
foreseeable future we are going to need it, and we're going to
need more. Yes, we need it to be as clean as it possibly can,
but the transition away from fossil fuels has been predicted
for decades, and, in fact, it is nowhere close.
So, as you say that you're making investment decisions, it
is clear you're making investment decisions based on your
politics and not on the best interest of national security or
the welfare of the American people.
I yield back.
Mr. Massie. The gentleman yields back.
I now recognize the gentlelady from Indiana for five
minutes.
Ms. Spartz. Thank you, Mr. Chair.
Mr. Bienvenue, why did you join Climate Action 100? Why did
you found with it? What was the reason?
Mr. Bienvenue. We viewed Climate Action 100+ as an
opportunity for investors to get together and share ideas and
figure out how to navigate, in our case, a $500 billion
portfolio through a very uncertain future. More information,
more ideas, and more discussion can only yield better
investment decisions.
Ms. Spartz. So, generally, you think it's a sharing ideas,
right? That's from your perspective?
Mr. Bienvenue. It was definitely to share research. It was
to share ideas. It was to just discuss an uncertain future
that's a challenging uncertain future.
Ms. Spartz. So, are you aware that, actually, on the
website of this, it says the goal is to transform practices and
policy that govern capital markets? Would you call it, as a
business investment professional, that's sharing ideas?
Mr. Bienvenue. I'm not in the marketing department for
Climate Action 100+--
Ms. Spartz. It's not a marketing department. Your part of
this group, so you subscribed that you're going to be
transforming practices and policies.
If your part of that group, then you are subscribing to
this, what is on their website. You're transforming practices
and policies governing capital markets. So, you agree, that's
the mission of the group you belong to?
Mr. Bienvenue. Again, we make our decisions independently--
Ms. Spartz. So, you agree with that mission, you belong to
that group. So, that part of this you would call transforming
practices and policies.
Mr. Bienvenue. Our focus is on generating returns to pay
pensions for generations.
Ms. Spartz. I get it, but your part of the group that
states on their website they want to transform--are you leaving
this group, or are you staying with this group?
They say on their website explicitly, we want to transform
practices and policies governing capital markets. So, are you
subscribing to this?
Mr. Bienvenue. We believe a climate transition is
happening, and an energy transition needs to--
Mrs. Spartz. So, transforming practices and policies, you
stand behind this mission of this Climate Action 100? You stand
behind the mission, transforming practices and policies on how
capital markets are governed?
Mr. Bienvenue. We want every company to have a credible
plan to navigate the climate transition. That way, they can be
profitable now, but they can be profitable 20 years from now
and 50 years from now so that those profits can serve as cash-
flows back to our members so that we can pay pensions.
Mrs. Spartz. So, as part of that, you are willing to
collaborate with different companies, with potential opening
the risk of collusion.
Have you ever looked into potential risk that it could be
collusion when company owners get together and say, we're going
to transform the markets, we are going to make sure that
markets are going to change? Have you ever discussed the
potential risk that you have antitrust violations?
Mr. Bienvenue. As I say, I'm not an attorney, I'm an
investor. I will tell you--
Ms. Spartz. Did you look at the investment risk? Did you
look at that risk? Because you have to protect--you have
fiduciary duty. So, you open up yourself and your funds to
risk.
Have you ever assessed the risk that it could be potential
antitrust violation?
Mr. Bienvenue. We have gotten counsel, and everything that
I know as an investor--I'm not an attorney, but I do have an
economics background, both as a student and as a teacher.
Ms. Spartz. Uh-huh.
Mr. Bienvenue. Everything that generated antitrust
legislation was about anticompetitive behavior. There is
nothing anticompetitive that I know and I can't even envision
how anything could be unlawful with what goes on with Climate
Action 100+.
Ms. Spartz. So, generally, when you have companies getting
together and try to change the rules on the market, the boards,
and they make a joint effort, you don't see that as a potential
problem and a risk to your investment in your pension fund?
Mr. Bienvenue. Every member of Climate Action 100+,
including ourselves, makes independent investment decisions,
independent--
Ms. Spartz. Why did they join the group? Why couldn't you
just make your independent decision? Why did you join the
group?
Mr. Bienvenue. We're a member of the New York Stock
Exchange. Does that mean that we agree with everything they do?
Ms. Spartz. Yes, but you don't discuss how you're going to
be changing the boards, doing all these actions when you're
part of New York Stock Exchange. Hopefully, you don't. Maybe
that's what the New York Stock Exchange is already doing by
now. Seems like SEC is.
So, I'm just saying, you actually have a goal that you
collude with, you agree to sit down and achieve. Do you think
it's a potential risk?
Mr. Bienvenue. We independently make every decision that we
make, whether it's proxy voting or investment decisions or
engagement decisions. Every decision is independent--
Ms. Spartz. When they're coordinated, it's a potential
risk.
Ms. Lubber, I have a question for you. You said, climate
change's a systematic financial risk. I'm not going to argue.
Climates have been changing. We used to have ice ages; how it's
contribute. We're not going to science.
You've noticed a lot of this new industry using a lot of
slave labor, like in China or DRC in Africa.
Are you willing to say that if we want to decrease or--
whatever--change something with fossil fuels, we are willing to
increase use of slave labor or Chinese operation without any
transparency? Do you think you would do it at that expense?
Ms. Lubber. Absolutely not. No.
Ms. Spartz. So, you're willing to bring more transparency,
what's happening in China and with slave labor? Is your fund
ever doing that? Or are you only worried--just take down
companies?
Ms. Lubber. A strong tenet of what we do is seek more
disclosure. What you are talking about--
Ms. Spartz. So, you're willing to have more disclosure, but
on Chinese operations of companies that using that or more
disclosure with slave labor and using some rare earth minerals
and using China--so you're willing to put that? Because I
haven't seen that. So, your fund is going to be as advocated
for the boards to have more disclosures on that?
Ms. Lubber. Absolutely. There is no justification--the
practices that you are talking about are highly unacceptable,
and I think they should be looked at and disclosed as well.
Ms. Spartz. OK. Thank you.
Mr. Massie. I thank the gentlelady from Indiana.
I ask unanimous consent to submit for the record a document
that was referenced by Ms. Hageman from Wyoming by Arjuna
Capital. It was written by one of the witnesses here, Ms. Lamb.
It said that,
And, here we are, facing a second civil war--this one
cultural--led by a pro-White, pro-Christian agenda. In other
words: ``Make America Great Again.
Without objection, that's in the record.
That concludes today's hearing.
We thank the witnesses for appearing before the Committee
today.
Without objection, all members will have five legislative
days to submit additional written questions for the witnesses
or additional materials for the record.
Mr. Massie. Without objection, the hearing is adjourned.
[Whereupon, at 2:20 p.m., the Subcommittee was adjourned.]
All materials submitted for the record by Members of the
Subcommittee on the Administrative State, Regulatory Reform,
and Antitrust can be found at: https://docs.house.gov/
Committee/Calendar/ByEvent.aspx?EventID=117415.
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