Mitigating Antitrust Risk in ESG Activities: Frequently Asked Questions About Industry Certifications and Standards
As we discussed in our prior post, Environmental, Social and Corporate Governance (ESG) issues and increased enforcement of the antitrust laws are both key priorities of the Biden-Harris Administration.
Although ESG-focused industry certifications (like “green” standards, for example) can be a crucial tool for companies dedicated to ESG priorities, these activities can give rise to antitrust risk and allegations of collusion or group boycotts. Below, we provide some guidance on frequently-asked-questions regarding antitrust risk around industry certifications.
May our company participate in designing standards for an ESG certification?
Yes. To the extent that your company is working with other competitors to define certification standards, be sure to review our prior post for practical pointers on how to mitigate antitrust risk when collaborating with competitors and industry working groups. Also, ensure standards are drafted fairly—the standards should not be created with the intention of excluding or disadvantaging particular market participants or potential new entrants. To minimize antitrust risk, it is also wise to ensure that all market participants (including small competitors) have an opportunity to weigh in on standards created.
How can we mitigate antitrust risk as a member in an industry group that awards ESG certifications to other market participants?
Ensure that all market participants are allowed to apply for organization membership and certification. Criteria used to assess whether a company might be granted a certification should be reasonable, objective, and fairly applied. To the extent that applicants are required to submit confidential or proprietary information to the group for the certification process, seek antitrust counsel before your company (or any employees) gains access to any such information. Finally, the standards should be voluntary—participating companies should be free to enact initiatives that exceed the standards set by the industry group.
Can our company decide to work only with customers or suppliers who have qualified for a certain ESG certification?
Yes, as long as that is a decision your company is making independently. Companies should not agree with other market participants to avoid doing business with certain suppliers or customers.
Is conduct aimed at achieving ESG goals immune from antitrust challenge?
No. Just because a particular activity is motivated by ESG goals, this does not immunize the conduct from antitrust challenge—from either the government, customers or suppliers, or other competitors. Seek out antitrust advice early if there are any questions or concerns.
© Arnold & Porter Kaye Scholer LLP 2021 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.