BlackRock Inc., Vanguard Group Inc., and State Street Corp. were sued by a group of states led by Texas for allegedly breaking antitrust law by boosting electricity prices through their investments, in the highest-profile lawsuit yet against the beleaguered ESG industry. [emphasis, links added]
Texas Attorney General Ken Paxton and 10 other states claim the money managers combined their market clout and membership in climate groups to pressure coal producers to cut output.
Shortages have caused Texans and residents of other states to pay higher power bills, according to the lawsuit, filed Wednesday in federal court in Texas.
The Republican-led states, including West Virginia and Montana, are asking the court to bar the three largest US money managers from using their stock in coal companies to vote on shareholder resolutions and take other steps in a way that restrains output and limits market competition.
Spokespeople for BlackRock and Vanguard didn’t have an immediate comment on the lawsuit. State Street didn’t immediately respond to emails seeking comment.
The complaint marks the culmination of a years-long investigation by GOP officials who have taken aim at Wall Street’s efforts to address climate change, the main pillar of the environmental, social, and governance (ESG) strategy.
Pressure has mounted on investment firms since last year when state attorneys general warned them that Americans’ savings shouldn’t be used to “push political goals” during the shareholder voting season.
In response, climate advocates say environmental risks are financial risks and that addressing them is among investors’ fiduciary responsibilities.
Paxton accused the investment firms of working together to cause industrywide reductions in coal production, which has resulted in higher energy prices for American consumers.
He cited a 1914 federal law, the Clayton Antitrust Act, that outlaws buying shares with the result of substantially reducing competition.
The lawsuit alleges that BlackRock, Vanguard, and State Street used their shareholdings in coal companies, including Peabody Energy Corp. and Arch Resources Inc., to press management to cut their carbon emissions.
This started in 2021 as part of the investment firms’ membership in groups such as Climate Action 100+ and Net Zero Asset Managers Initiative.
In effect, the firms formed “a syndicate and agreed to use their collective holdings of publicly traded coal companies to induce industrywide output reductions,” according to the suit.
Read more at Dallas Morning News
