ESG Initiatives and Antitrust: A Cross-Jurisdictional Snapshot

In Europe, and building on the European Green Deal, the 2024 Draghi report on EU competitiveness draws a clear link between clean energy and increased competitiveness. The structure of the new European Commission is indicative of the Commission's support for that message, with Teresa Ribera's position combining responsibilities for competition and the EU's Green Deal (as Executive Vice-President for a Clean, Just and Competitive Transition and the Commissioner responsible for Competition). Indeed, the President of the European Commission (Ursula von der Leyen) has instructed Teresa Ribera to "rid" the EU of its dependency on fossil fuels in order to address the competitiveness gap identified by Draghi. In the UK, the green transition is equally a key element of the government's "pro-growth" agenda, with the Clean Power 2030 Action Plan having recently been published and the Net Zero Council re-launched.

Looking beyond Europe, Japan - with its long tradition of industrial energy efficiency - shares similar goals to the EU and UK as set out in its "Green Transformation". However, in contrast, whilst the US has decarbonisation goals in place (through its Inflation Reduction Act) the second Trump administration has demonstrated a willingness to challenge ESG collaborations, politically and legally, as anticompetitive.

So where does competition law fit in? It is clear that, for change to occur on a global scale, private sector cooperation is required. Due to the significant investments involved in climate-related projects (in terms of costs, technology and expertise) and "first mover disadvantages", single firms may be unable or unwilling to achieve meaningful change working alone. The challenges lie in navigating what types of collaborations will be permitted, especially when having to navigate antitrust rules in multiple jurisdictions.

The UK Competition Markets Authority ("CMA") published its "Green Agreements Guidance" back in October 2023. The guidance only applies to "Environmental Sustainability Agreements" – namely those collaborations aimed at mitigating adverse impacts on the environment or supporting environmental sustainability, e.g. improved air or water quality. (As discussed later, this approach contrasts with the European Commission's guidance which provides flexibility for a broader range of societal or ESG arrangements e.g. those pursuing "fair trade", labour or human rights goals).

The CMA's most permissive approach is reserved for a sub-set of these Environmental Sustainability Agreements – namely "Climate Change Agreements". These are agreements that specifically combat climate change e.g. by reducing the impact of greenhouses gases produced by the collaborating firms' activities.

The CMA's overall approach balances environmental goals with competition law in two ways: (i) increased guidance on when green agreements can benefit from individual exemption (i.e. on the basis that the benefits of the agreement outweigh the competitive harm); and (ii) the possibility of seeking informal guidance.

To meet the individual exemption criteria, sustainability agreements are required to:

(i) Produce benefits for consumers that outweigh the harm: The benefits of the agreement to UK consumers (e.g. reductions in greenhouse gas emissions or the creation of new or improved products which have a reduced impact on the environment) must outweigh the harm suffered by consumers as a result of reduced competition from the agreement.

(ii) Be Necessary: There must be no less restrictive, but equally effective, alternative to the agreement for achieving the green benefits, e.g. it must be the case that the green benefits cannot be otherwise achieved by one party alone or as quickly/cheaply (overcoming a "first mover" disadvantage could be a relevant justification).

(iii) Preserve Competition: Collaborations to achieve sustainability goals should not substantially eliminate competition and must be time-limited and proportionate to the goals.

The CMA has also set up an "open door policy" whereby businesses that are considering entering into an environmental sustainability agreement can approach the CMA (provided they have conducted an initial self-assessment) for informal guidance as to whether the proposed agreement is compliant. The purpose is to fill any gaps that may exist within the guidance as well as providing clarity as to how it applies in specific circumstances. If the CMA were to subsequently conclude that an agreement infringed competition law, having already provided comfort by way of informal guidance, the CMA will not issue fines against the parties (provided information has not been withheld).

Since the establishment of the "open-door policy", the CMA has provided four informal opinions – all of which have given a positive view:

• Fairtrade's Shared Impact Initiative (2023), which required UK grocery retailers to commit to purchasing greater volumes of certain Fairtrade products (banana, coffee and/or cocoa), on long-term contracts. In the CMA's view, the initiative was unlikely to raise competition concerns on the basis that it: (i) set minimum standards only; (ii) covered only a small part of market; and (iii) allowed producers and retailers to continue to compete on price/quality, retailers to purchase volumes outside of the initiative, and for retailers to compete downstream. The CMA therefore did not look into the potential application of individual exemption in this case.
  
  
• WWF Basket initiative (2024), under which supermarkets committed to decarbonise more of their supply chain by setting standardised emission targets and related incentives (e.g. preferred payment terms) /disincentives (e.g. penalties such as de-listing) for their suppliers. The CMA was comfortable that individual exemption was applicable on the basis that there were credible reasons to believe that the emission reductions would outweigh the harm to suppliers or retail competition for consumers (which could take the form of higher pricing or reduced availability of products due to supplier pressure to meet net-zero targets). The CMA applied the more permissive approach for climate change agreements in this case.
  
  
• Builders Merchants Federation (2025), which was a proposal to use a single provider of supply chain assurance services to develop a standardized ESG platform, with the objective being to (i) make it easier for merchants to assess the impact of their supply chains; and (ii) for suppliers to improve their processes and policies. The CMA considered there was some risk of anti-competitive effects but, in any event, found that the proposal was reasonably likely to satisfy the exemption criteria on the basis that cost reduction benefits and environmental benefits would outweigh any potential harm to competition. The CMA considered the proposal as a "mixed agreement" (generating both climate change and other environmental benefits).
  
  
• 3 Keel: Landscape Enterprise Networks (2026), a scheme facilitated by consultancy firm 3 Keel, designed to connect businesses, public bodies, and farmers to co-fund regenerative agriculture and nature-based solutions. In confirming that it does not expect to take enforcement action against the scheme, the CMA considered three specific aspects. First, the importance of eligibility criteria being applied on an objective, fair and non-discriminatory basis. Second, whilst the CMA could not rule out competition law risks relating to the use of guide prices (i.e. non-binding prices calculated by 3Keel to assist farmers in their pricing) as these could act as a focal point, it did set out certain mitigation measures, i.e.: (i) only using guide prices where strictly necessary; (ii) ensuring guide prices are understood to be non-binding; and (iii) refraining from making statements as to whether guide prices are expected to be adhered to, or how often they are adhered to. The CMA did not consider whether the guide prices could benefit from individual exemption as the parties did not advance a self-assessment. Third, on the risk of coordination arising out of 3Keel’s role, the CMA highlighted the need for an effective conflict of interest policy. Interestingly the CMA did not opine on the joint purchasing and selling aspects of the scheme (save for some high-level comments on the risks of information exchange) given the scheme will be characterised by a set of individual vertical agreements (between businesses/public bodies and farmers) and each separate agreement will be fact specific – the participants are therefore left to self-assess.

The European Commission's guidance on Sustainability Agreements is included in its wider Horizontal Guidelines.

As noted above, the EU's guidance differs to the UK in that it applies to agreements with wider social objectives. Also, the EU does not apply the explicitly more permissive approach to climate change agreements.

The same criteria for individual exemption apply as in the UK (although without the more permissive approach described above). The Commission also allows for informal guidance to be sought, albeit the scope is narrower than in the UK: informal advice is only available where the agreement poses a novel or unresolved question.

On 9 July 2025, the Commission issued its first piece of informal guidance:

• The Commission was asked to consider an agreement, proposed by APM Terminals, between port terminal operators, involving the joint purchasing and setting of minimum technical specifications for battery-electric container-handling equipment used in ports. The agreement aimed to accelerate the move from diesel to electric powered equipment in EU ports, thereby contributing to the reduction of CO2 emissions. The Commission was comfortable that the agreement did not raise competition concerns, provided that each port terminal operator (i) limits the exchange of competitively sensitive information to what is strictly necessary; (ii) retains the ability to purchase the equipment independently; and (iii) caps the volume of demand that is pooled through the agreement.

Recent action has, however, also highlighted that the Commission will not allow agreements to benefit from ESG treatment where they simply refer to sustainability goals (without those being the true purpose) or where ESG goals are used to conceal anti-competitive intent:

• In the AdBlue diesel emissions case (2021), car manufacturers were found to have collaborated to standardize equipment for AdBlue, an emission-reducing technology, to facilitate quicker market roll-out. However, the Commission found that they also colluded to delay the introduction of advanced emission reduction technologies despite having the capacity to do so. Consequently, the Commission imposed significant fines (under settlement proceedings) of €875 million, asserting that the cooperation reduced green innovation.
  
  
• Similarly, in the ELVs case (2025), 16 major car manufacturers were found to have colluded over the course of 15 years to agree (i) not to pay car dismantlers for processing ELVs; and (ii) not to promote how much of an ELV could be recycled, recovered, and reused and how much recycled material is used in new cars. The Commission found that the manufacturer's goal was to prevent consumers from considering recycling information when choosing a car, which could lower the pressure on companies to go beyond minimum legal requirements. Fines were imposed under settlement agreements – a total of €458 million by the Commission as well as a total of £77.6 million by the CMA in its parallel investigation.

The US approach to antitrust and climate change is conservative and grounded in traditional competition law. There is currently no explicit antitrust exemption or safe harbour for climate-related collaborations, an idea to which even progressive antitrust enforcers have shown resistance.^[2] The position differs significantly to the EU and the UK in the ESG space, both at the Federal and State level, with politicians and legal officials now using antitrust as a means by which to put negative pressure on ESG collaborations, particularly on institutional investors and their investments in fossil fuel companies. Although challenges to collaborative climate action initiatives were present pre-Trump's second term, they have intensified recently.

At the Federal level, the Federal Trade Commission and Department of Justice have not signalled any extra flexibility for ESG collaborations. Indeed, the rhetoric emphasises dissatisfaction with the growth of ESG investments and collaborations.

In June 2024, Republicans on the House Judiciary Committee published its “Climate Cartel” report alleging collusion among climate-focused investor groups, activist investors, asset managers, proxy advisors, and blue state pension funds to decarbonize the American economy. The report alleges that the so-called climate cartels were using ESG, net zero initiatives, and other disclosure requirements that amount to a “war on our way of life."^[3] Following the publication of this report, the House Judiciary Chairman required over 130 US-based companies, retirement systems and government pension programs to provide further information about "their involvement with the woke ESG cartel Climate Action 100+." The political pressure led to the withdrawal of large investors, including JP Morgan, Goldman Sachs, Wells Fargo, Citi, Bank of America, and Morgan Stanley, throughout 2024 from climate-focused organizations including Climate Action 100+, and the Net Zero Banking Alliance, a sub-group of the Glasgow Financial Alliance for Net Zero. The Alliance encourages companies operating in the financial sector to reduce greenhouse gas emissions by financing the development and scaling of net-zero technologies to replace high-emitting sources. Republican politicians have also denounced net zero initiatives as harmful to the aviation and food & agriculture sectors.

In November 2024, the State of Texas and ten other Republican-led States filed an antitrust lawsuit against institutional asset managers BlackRock, Vanguard, and State Street alleging that they used their large shareholdings in publicly-held coal producers to cause those producers to reduce output, in turn leading to higher energy and electricity prices for US consumers. The proceedings are ongoing: in August 2025 the federal court overseeing the case largely rejected the defendants’ motion to dismiss the states’ claims.

In January 2025, Blackrock separately settled a case brought by the Tennessee Attorney General in 2023—when Blackrock was still a member of Climate Action 100+ and Net Zero Asset Managers - alleging misleading consumer practices around its ESG practices.^[4] Blackrock accepted a range of measures as part of its settlement, including casting proxy votes based on independent judgment, maintaining records of rationale for opposing management recommendations on environmental/social matters, disclosing proxy votes and rationale on a more regular basis, removing ESG ratings from US product pages of non-ESG funds, and audits of recordkeeping obligations.^[5]

In a similar way to the EU and UK, the Japan Fair Trade Commission issued a revised "Green Guideline" in April 2024^[3] in order to clarify the circumstances in which green collaborations will be permitted under Japan's Antimonopoly Act. In addition, the Japan Fair Trade Commission has set up a "green consultation desk" to proactively respond to enquiries from businesses regarding individual proposals. In many ways, parallels can be drawn between this approach and the UK and EU's approach to individual exemption and informal advice.

Pursuant to the Guideline, where green agreements either: restrict price or other important competitive metrics; restrict the entry of new businesses; or exclude existing businesses then, even if the objective is to achieve a green society, that objective alone cannot justify the initiative. However, where joint efforts are necessary (e.g. for equipment upgrades, technological development or decarbonization), those efforts will not be presumed to breach the Antimonopoly Act provided they do not have the purpose of restricting competition, and provided there are no other less restrictive alternative means of achieving the benefits.

By way of example, even if the green agreement involves the exchange of competitively sensitive information such as production volumes or timing of equipment disposal etc., the agreement will not automatically be deemed to raise competition concerns. Rather, if the effect of the initiative on the market is limited and does not result in a "substantial restriction of competition in a particular field of trade," it will be permitted under the Antimonopoly Act. Whether or not a substantial restriction of competition occurs is determined by considering factors such as whether there are significant competitors and whether competitive pressure from imports from overseas exists.

Whilst the latest revision of Japan's Green Guideline is based on several specific examples with the aim of creating certainty, more guidance is needed. Therefore, individual consultations with the Japan Fair Trade Commission and future revisions are keenly awaited.

It is imperative for businesses to exercise caution when collaborating to pursue their ESG goals as, depending on the jurisdictions in which they are operating, the regulators' approach may differ significantly (particularly in the U.S.). Furthermore, if the collaboration is across multiple jurisdictions, in practice it is likely to be necessary for the collaboration worldwide to meet the standards of the jurisdiction which sets the highest bar.

[1] With thanks to Mika Masuda of Nishimura & Asahi for comments on the Japanese section of this briefing, and to Ryan Will, Counsel at Vinson & Elkins for comments on the US section of the briefing.
[2] See, e.g., Lina Khan “ESG Won’t Stop the FTC” [link] (December 21, 2022).
[3] In stark contrast with the [EU CSRD/ CSDDD] directives on emissions disclosures, the HJC Report states “[t]here is no legitimate procompetitive justification for requiring additional emissions disclosures, as they are immaterial and would harm the disclosing company” and that “[a]bsent collusion, it is unclear why a company voluntarily would disclose information about its carbon emissions.”
[4] https://www.tn.gov/attorneygeneral/news/2023/12/18/pr23-59.html.
[5] https://www.tn.gov/attorneygeneral/news/2025/1/17/pr25-3.html.
[6] Guidelines Concerning the Activities of Enterprises, etc. Toward the Realization of a Green Society under the Antimonopoly Act.