As politically motivated investing booms, activist organizations and others are engaging in coordinated, collusive campaigns to defund and constrain political targets like oil companies while directing more money to environmental and activist causes.

Key points:

  • Environmental, social, and governance (ESG) strategies and divestment campaigns could violate antitrust laws. Federal law prohibits companies from colluding on group boycotts or conspiring to restrain trade, even to advance political or social goals.
  • ESG retirement plans could violate ERISA and public pension laws that require managers to invest solely for the purpose of maximizing financial returns for pensioners and beneficiaries.
  • ESG divestment campaigns that pressure lenders to breach existing or prospective contracts with targeted companies could constitute tortious interference with contracts.
  • Federal and state legislators and regulators should strengthen fiduciary requirements and forbid discrimination against politically targeted businesses.
  • States should divest their assets from companies that collude to commit antitrust violations or deny financing or services to businesses operating in their jurisdictions.