Texas Attorney General Ken Paxton, joined by officials from 10 other Republican-led states, has filed a federal lawsuit against BlackRock Inc., Vanguard Group Inc., and State Street Corp., accusing them of antitrust violations that allegedly drove up electricity prices.
“Blackrock, Vanguard, and State Street utilized the Climate Action 100 and the Net Zero Asset Managers Initiative to signal their mutual intent to reduce the output of thermal coal, which predictably increased the cost of electricity for Americans across the United States,” according to the Office of the Attorney General.
The complaint, filed Wednesday in a Texas federal court, seeks to bar the three firms from using their stock in coal companies to influence shareholder resolutions and decisions that allegedly limit market competition. The 11 states joining the lawsuit include Alabama, Arkansas, Indiana, Iowa, Kansas, Missouri, Montana, Nebraska, West Virginia and Wyoming.
The lawsuit also accused the firms of misrepresenting their commitment to maximizing profits for investors who selected non-ESG funds. Instead, these funds allegedly pursued ESG goals, contrary to investor expectations and the firms’ assurances.
“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,” said Attorney General Paxton. “Their conspiracy has harmed American energy production and hurt consumers. This is a stunning violation of State and federal law.”
The legal action follows years of scrutiny from Republican officials who argue that ESG practices undermine free-market competition and unfairly impact industries like coal and natural gas. GOP leaders contend that these policies not only harm energy producers but also burden American households with higher costs.
According to Reuters, BlackRock dismissed the allegations as “baseless and defying common sense,” asserting in a statement that it would not invest in coal producers with the intent to harm them. The firm also reportedly criticized the lawsuit, claiming it jeopardizes Texas’ pro-business reputation and could deter investments in essential consumer-reliant industries.
Meanwhile, Vanguard and State Street have yet to issue comments on the lawsuit.
This case adds to the intensifying scrutiny of ESG practices, as GOP officials continue to push back against what they view as overreach in corporate governance and environmental advocacy.
