BlackRock named in Republican AGs' antitrust suit over climate goals

(CN) — A group of 11 Republican state attorneys general sued three major investment companies Wednesday over the companies’ climate goals, claiming they conspired to force a reduction in coal supply in violation of antitrust laws.

BlackRock Inc., State Street Corporation and The Vanguard Group, the three largest shareholders of American publicly traded coal companies, used their influence to pressure those companies to reduce output in order to lower carbon emissions, the states say in the lawsuit, thereby harming consumers and the economy.

“Defendants have leveraged their holdings and voting of shares to facilitate an output reduction scheme, which has artificially constrained the supply of coal, significantly diminished competition in the markets for coal, increased energy prices for American consumers, and produced cartel-level profits for Defendants,” the attorneys general wrote in a complaint filed in the Eastern District of Texas.

Led by Texas Attorney General Ken Paxton, the attorneys general asked the court to take any action necessary to stop anticompetitive behavior, including ordering divestiture or issuing an injunction preventing the companies from using their shares in coal companies to restrain output. They take issue with the companies’ participation in groups like Climate Action 100+ and the Net Zero Asset Managers initiative, which call on investors to use their investment power to help lower greenhouse gas emissions.

Wednesday’s lawsuit is part of a larger battle by conservative politicians against ESG investing. Short for environmental, social and governance, ESG investing involves considering in investment decisions factors like a company’s impact on the environment, its relationships with employees and communities and the quality of its leadership and internal controls.

The practice is aimed at promoting sustainable and ethical business practices, but many Republicans argue that ESG investing prioritizes political and social agendas over financial returns, potentially harming investors and the economy.

“Texas will not tolerate the illegal weaponization of the financial industry in service of a destructive, politicized ‘environmental’ agenda. BlackRock, Vanguard, and State Street formed a cartel to rig the coal market, artificially reduce the energy supply, and raise prices,” Paxton said in a statement. “Their conspiracy has harmed American energy production and hurt consumers. This is a stunning violation of State and federal law.”

Vanguard did not respond to requests for comment on the lawsuit. A State Street spokesperson called the lawsuit “baseless” and said the company looks forward to fighting it in court.

In an email to Courthouse News Service, a spokesperson for BlackRock said the company is “deeply invested in Texas’ success.”

“The suggestion that BlackRock has invested money in companies with the goal of harming those companies is baseless and defies common sense,” the spokesperson said. “This lawsuit undermines Texas’ pro-business reputation and discourages investments in the companies consumers rely on.”