The day before Thanksgiving, eleven states’ Attorneys General filed suit against BlackRock, Vanguard and State Street, claiming the firms violated antitrust laws through climate activism that reduced coal production and drove up energy prices. According to the press release from the Texas Attorney General,
“Over several years, the three asset managers acquired substantial stockholdings in every significant publicly held coal producer in the United States, thereby gaining the power to control the policies of the coal companies. Using their combined influence over the coal market, the investment cartel collectively announced in 2021 their commitment to weaponize 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.
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…
Deliberately and artificially constricting supply increased prices and enabled the investment companies to produce extraordinary revenue gains. 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.”
Matt Levine offers an interesting analysis of the complaint here. He points out that there is nothing ESG-specific about the states’ arguments – they are based in theories about index funds and antitrust out of the airline industry in the late 2010s.
Implications are scary for other investor-forward sustainability efforts that follow a similar path of trying to reduce demand or supply of existing materials/products as part of the transition to improved greener ones (think plastics, for instance). Will we see further claims that changes of this type are “conspiracies” that result in increased prices and “extraordinary revenue gains” as existing materials/products phase out? This could meaningfully dampen investor sustainability initiatives.
Members can learn more about climate litigation here.
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