Sustainability and Net Zero climate agreements – a transatlantic antitrust perspective

Abstract

The climate crisis requires a transition to a Net Zero economy. Such a transition is possible only through concerted public and private action. While a number of financial institutions and insurance companies had agreed to align their activities with Net Zero targets, reconsidering support for new coal and fossil fuel projects, these initiatives have come under attack from political groups in the US, who have labelled such agreements ‘collective boycotts’. Such accusations feed a collective action problem, and thus hinder private sector cooperation. This article discusses the background to Net Zero Agreements, and the recent antitrust criticisms, under US, EU and UK antitrust law and precedent. Net Zero Agreements can alleviate market failures, resolve collective action problems, and improve consumer welfare by lowering the potentially huge costs to consumers of an unmitigated climate crisis. Under a rule of reason, antitrust authorities and courts in the US, EU, and UK can and should give room for private sector cooperation between companies pursuing an effective transition to a clean economy, where these agreements correct market failures and resolve collective action problems.