Last month, we posted an update describing Florida’s investigation into whether the CDP and the Science Based Targets Initiative are facilitating unlawful collusion among financial institutions and investment services to use an environmental “scoring system” to make investment decisions. On August 12, 2025, the Federal Trade Commission (the “FTC”) fired another warning shot across the bow of competitors who may seek to limit competition between themselves in the name of environmental stewardship. It secured written commitments from truck and engine manufacturers to disavow their agreement with California’s Air Resources Board (CARB) “to produce ‘zero emissions’ engines rather than internal combustion engines” in compliance with CARB regulations. Such agreements limited the output of trucks with internal combustion engines in violation of the Sherman Act and the FTC Act, according to the FTC. Furthermore, the FTC maintains that the agreements with CARB were not shielded from scrutiny by the Noerr-Pennington or state action doctrines in part because the manufacturers agreed to abide by the restrictions even if the CARB regulations were later declared to be unlawful—which eventually happened when Congress revoked CARB’s waivers from the Environmental Protection Agency.
The FTC investigation and settlement marks the latest example of the risk competitors undertake when they agree to coordinate their output or pricing activities in service of ESG goals. Although the Biden Administration issued its own warnings that ESG objectives do not justify anticompetitive activity, the current Administration—and those politically aligned with it at the state level—view such efforts as inextricably linked with ESG efforts that should be condemned and rolled back. We will continue to update you on further developments in this space.