ESG Cooperations & Competition Law: Navigating the Legal Boundaries

Companies across industries increasingly recognize that tackling systemic human rights and environmental challenges in global supply chains often requires collective action to have true impact. Whether addressing forced labor, promoting living wages in agricultural supply chains, or remediating unsafe working conditions, a single company can rarely solve these problems alone. Trade associations, multi-stakeholder initiatives, and other forms of cooperation between competitors have emerged as critical vehicles for supply chain due diligence and remediation measures.

Yet every time competitors sit down together, even for the noblest of purposes, competition law is in the room. The legal frameworks in the European Union, the United Kingdom, and the United States share a common premise: agreements between competitors that restrict competition are prohibited, no matter the purpose. Where they diverge, however, is in how much space they leave for sustainability-driven collaboration, and that divergence matters enormously for companies operating on both sides of the Atlantic.

The EU Framework: Encouraging Cooperation Within Guardrails

The European Commission’s (the “Commission”) revised Horizontal Guidelines, adopted in 2023, provide helpful guidance for ESG cooperation. The Commission explicitly acknowledges that “sustainability agreements”, including those pursuing human rights and environmental objectives, can generate substantial economic benefits and, in many cases, fall entirely outside the scope of the EU cartel prohibition under Article 101(1) TFEU.

The Commission identifies several categories of cooperation that are unlikely to raise competition concerns at all. These include agreements aimed at ensuring compliance with binding international treaties or national laws (such as prohibitions on child labor or the use of certain pollutants), agreements concerning only a company’s internal corporate conduct (such as eliminating single-use plastics from offices), and the establishment of supplier databases containing general sustainability information, provided they do not oblige parties to purchase from (or boycott) specific suppliers.¹ Industry-wide awareness campaigns also fall into this safe zone, as long as they do not amount to joint advertising of specific products (Horizontal Guidelines, para. 531).

Even where a sustainability agreement falls within the scope of Article 101(1) TFEU, it may still be justified under Article 101(3) TFEU if it produces efficiency gains, is indispensable to achieving its sustainability objectives, passes benefits on to consumers, including through improved product quality or, notably, collective societal benefits (i.e., benefits that occur irrespective of the consumer’s individual appreciation of the product and accrue to a wider section of society than just the consumers in the relevant market), and does not eliminate competition (Horizontal Guidelines, para. 557 et seq). The Commission has illustrated this flexibility through fictional examples, including a “Fair Clothing” agreement covering the large majority of EU clothing firms agreeing to only purchase clothing from producers in developing countries that respect certain minimum wage levels. Despite its broad market coverage, the Commission found that in such a scenario the effect on consumer prices was minimal (at most 1.5-2%) given the margins added along the value chain, and that productivity improvements from better working conditions could even have a price-lowering effect (Horizontal Guidelines, para. 601).

The Commission has also issued informal guidance on sustainability-related collaborations. In July 2025, it published its first guidance letters under the revised Notice on Informal Guidance of 2022 in relation to a ESG cooperation. The guidance concerned the compatibility with EU competition rules of a sustainability agreement for the joint purchasing and the setting of technical specifications for electric container-handling equipment used in ports to reduce CO2 emissions. The Commission found no concerns under Article 101(1) TFEU, provided key safeguards were in place, including limited information exchange, and preserved independent decision-making. While these guidance letters are non-binding and uptake of the mechanism has been limited since 2022, they offer valuable insight into the Commission’s analytical approach and can reduce uncertainty for businesses pursuing legitimate sustainability objectives.

The legislative landscape reinforces this direction. The EU Corporate Sustainability Due Diligence Directive (CSDDD), which entered into force in June 2024, explicitly invites companies to collaborate with other entities to prevent, mitigate, or remedy adverse human rights and environmental impacts, while acknowledging that such collaboration must comply with competition law (See Article 10 para. 2 (f) and Article 11 para. 2 (g) CSDDD). The message from the EU legislator is clear: collaboration is strongly encouraged, as long as it is structured within the boundaries of competition law.

National competition authorities have echoed this pragmatic approach. The German Supply Chain Act similarly requires companies to consider collaboration with others as part of their remedial actions (See Article 7 para. 2 no. 2 German Supply Chain Act). Consequently, the German Federal Cartel Office (FCO) has reviewed several sustainability initiatives (including the Cocoa Forum promoting living incomes for cocoa farmers and a banana sector initiative promoting living wages in Ecuador) and concluded that neither raised competitive concerns. Critical to these outcomes were the voluntary nature of participation, the absence of binding minimum prices, and the fact that no competitively sensitive information such as purchase prices, costs, or margins was exchanged between members.

The UK Landscape: A More Permissive Approach to Climate Change

The UK Competition and Markets Authority (“CMA”) published guidance on environmental sustainability agreements in October 2023, which is broadly similar to the EU Horizontal Guidelines but notably more permissive in certain respects. Like the EU framework, the CMA identifies categories of agreements unlikely to raise competition concerns, including industry standards, phasing out non-sustainable products, pooling supplier information, and industry-wide efforts to tackle climate change. However, the key difference lies in the treatment of “climate change agreements”—a concept absent from the EU Guidelines. For such agreements (those contributing towards binding UK climate change targets), the CMA applies a more permissive approach to the consumer benefit test: rather than requiring benefits to accrue to substantially the same consumers who suffer the harm, the CMA will consider the totality of benefits to all UK consumers, without apportioning between in-market and out-of-market consumers. The CMA justifies this departure due to the “exceptional nature of the harms posed by climate change.” This potentially creates a more favourable environment for climate-focused collaboration in the United Kingdom compared to the European Union. Additionally, unlike the European Union’s broader “sustainability agreements” covering economic, environmental and social development (including human rights), the CMA guidance applies only to the “E” in ESG – environmental sustainability agreements.

The CMA also operates an “open-door policy” for discussing sustainability initiatives, offering protection from enforcement action and fines for companies that engage proactively. To date the CMA has only published a small number of informal green guidance but these already allow important lessons to be drawn. Interestingly, from the two most recent guidance documents published in 2026, the CMA’s approach to such initiatives looks set to continue:

• In the Builders Merchants Federation’s supply chain assurance scheme case, the BMF proposed recommending members use one preferred platform for supplier ESG credentials instead of multiple supply chain assurance services; and
• In the 3Keel Landscape Enterprise Networks regenerative agriculture initiative (LEN), 3Keel is trying to encourage businesses co-funding regenerative agriculture and nature-based solutions to improve ecosystem services.

Both initiatives involve collaborative structures such as joint purchasing arrangements, guide pricing mechanisms and single-platform recommendations. Although competitors participate and collaborate closely in both schemes with potential risks of coordination, the CMA concluded that in neither case did it expect to take enforcement action (noting importantly however in the LEN case that individual transactions would need their own specific assessments). In reaching these conclusions, on the facts, the CMA noted that participation remained voluntary, commercial decision-making (particularly on pricing and supplier selection) stayed independent, the eligibility criteria was objective and non-discriminatory, and competitively sensitive information was not exchanged. As such, the CMA continues to adhere to its “open door approach” to relatively ambitious, industry-wide sustainability initiatives that can navigate competition law successfully, provided appropriate safeguards and regular reviews are built in from the outset.

The US Landscape: Greater Caution Required

The US presents a markedly different environment for ESG cooperation. Most collaborative initiatives are assessed under the “rule of reason,” which balances pro- and anti-competitive effects. However, a critical distinction from EU law is that US antitrust law does not recognize ESG or sustainability objectives as a defense to anti-competitive conduct. Pro-competitive justifications must relate to the same relevant market as the alleged competitive harm.

The Department of Justice has described carbon reduction as “no more a defense to the conduct alleged here than it would be to price fixing among airlines that reduced the number of carbon-emitting flights.”² Similarly, State Attorneys General have played an active role in pushing back on ESG activities by financial services companies, reflecting dual antitrust jurisdiction in the US where States can individually, or collectively take their own path without federal government involvement. Further, the FTC seems ready to prosecute collusion on ESG issues signaling that collaboration  in the ESG field may not merely lack a defense, it may attract affirmative enforcement attention.

That said, US law is not a blanket prohibition on ESG cooperation. Information exchange that does not facilitate an anticompetitive agreement is generally permissible under the rule of reason, particularly where members make independent business decisions. The FTC and DOJ are currently seeking input on guidelines for collaborations among competitors, which are highly likely to address ESG collaborations, although it remains to be seen how useful these are in practice for businesses seeking to work with competitors in this area. 

Practical Safeguards For Compliant Cooperation

Companies seeking to collaborate on ESG and supply chain due diligence should structure their initiatives around a set of core principles, noting that these situations involve case specific analyses so there is no “one size fits all” safe harbor:

• Voluntary participation and independent decision-making: Participation in any collaborative initiative must be voluntary and non-exclusive. Critically, each company must retain full independence over its commercial decisions. Decisions about whether to continue purchasing from a supplier, how to adjust pricing, or how to respond to audit findings must always be made unilaterally. Any collective agreement to cease purchasing from a supplier may amount to a boycott and requires careful case-by-case antitrust assessment.
• Strict avoidance of exchanging competitively sensitive information: Companies must not exchange information on pricing, costs, terms and conditions, volumes, margins, market shares, or future commercial strategies. The sharing of supplier names to address specific human rights issues is often necessary and generally low-risk, but should always be limited to what is strictly necessary for the remediation purpose at hand.
• Robust meeting protocols: Every meeting or discussion among competitors should be governed by a pre-circulated agenda focused exclusively on the human rights or sustainability issue in question. Participants should be reminded at the outset not to share competitively sensitive information. Minutes or recordings should be maintained. If competitively sensitive information is inadvertently disclosed, the exchange must stop immediately, the incident documented, and all relevant information should be pulled back or returned.
• Careful database design: Supplier databases are a powerful tool for collaborative due diligence, but must be designed with the boundaries set by competition laws in mind. Databases should contain general information about suppliers and audit results, but should not identify which members purchase from which suppliers or which member commissioned a particular audit, unless that information is already publicly available.
• Heightened caution for transatlantic activities: Any joint discussions or remediation efforts that could affect prices or output or the competitive process in the US market require particular care. Where competing members with US market presence are involved, discussions must never touch on pricing, price-related terms, or any proxy for price, even a general acknowledgment that price increases may be necessary to achieve a sustainability goal. Companies with significant US exposure should consider seeking antitrust counsel review on a case-by-case basis before engaging in joint remediation.

Looking Ahead

The legal landscape for ESG cooperation under competition law is dynamic and varies across jurisdictions. For companies operating globally, this divergence demands a dual-track compliance strategy: leveraging the flexibility offered by EU law while respecting the more restrictive boundaries of other jurisdictions. The good news is that the core principles of compliant collaboration (voluntary participation, avoidance of competitively sensitive information exchange, independent commercial decision-making, and strict focus on the sustainability objective) are universally sound and will serve companies well under many regimes. Collaboration on ESG remains not only possible but essential; the key is structuring it with the discipline that competition law demands.

At Mayer Brown, we provide our clients with market-leading advice that enables them to navigate these kind of complex, broad-ranging and rapidly evolving ESG issues in an increasingly connected, global business environment. With the benefit of our established relationships with key stakeholders in Europe and the US, we are well-placed to assist multinational corporations in navigating the field of ever-increasing ESG requirements. Please get in touch to discuss further.