BlackRock, State Street, Vanguard sued over climate stance

Texas and 10 other Republican-led states are suing BlackRock, State Street and Vanguard, saying their climate activism violated antitrust laws and caused reduced coal production and higher energy prices.

Texas Attorney General Ken Paxton filed a case with the Federal Court in Tyler, Texas, claiming the institutions "conspired to artificially constrict the market for coal through anticompetitive trade practices."

The lawsuit claims that BlackRock, State Street and Vanguard progressively acquired substantial shareholdings in every major publicly listed coal producer in the US to influence the coal companies' policies.

For example, collectively they own 30.43% of Peabody Energy, 34.19% of Arch Resources, and 28.97% of CONSOL Energy. Together, Arch Resources and Peabody Energy are responsible for more than 30% of all the coal produced in the US.

The lawsuit claims the asset managers' involvement in the companies led to them producing less coal but charging more for it. For instance, from 2019 to 2022 Peabody Energy's production fell by 25.5% while its revenues rose US$358.5 million and profits increased 854% to US$1.59 billion, documents cite.

"Using their combined influence over the coal market, the investment cartel collectively announced in 2021 their commitment to weaponise their shares to pressure the coal companies to accommodate 'green energy' goals. To achieve this, the investment companies pushed to reduce coal output by more than half by 2030," the Attorney General's office said.

The filing claims the companies' used their membership of Climate Action 100 and the Net Zero Asset Managers Initiative to "signal their mutual intent" to depress the output of thermal coal, increasing the cost of electricity for US residents.

State Street left the Climate Action 100 group at the beginning of this year, while BlackRock transferred its membership to BlackRock International. Vanguard withdrew from the Net Zero Asset Managers Initiative in late 2022.

"Deliberately and artificially constricting supply increased prices and enabled the investment companies to produce extraordinary revenue gains," the Attorney General's office said.

"This conspiracy violated multiple federal laws that prevent a major shareholder, or a group of shareholders, from using their shares to lessen competition or engaging in other anticompetitive schemes. Further, the companies broke Texas antitrust and deceptive trade practices laws."

The lawsuit is backed by 10 other US states. These are Alabama, Arkansas, Indiana, Iowa, Kansas, Missouri, Montana, Nebraska, West Virginia, and Wyoming.

Commenting, Paxton said: "Texas will not tolerate the illegal weaponisation of the financial industry in service of a destructive, politicised 'environmental' agenda. BlackRock, Vanguard, and State Street formed a cartel to rig the coal market, artificially reduce the energy supply, and raise prices."

"Their conspiracy has harmed American energy production and hurt consumers. This is a stunning violation of State and Federal law."