Texas and BlackRock have locked horns in several battles over ESG. The investment firm was placed on a state “banned” list in 2022, preventing it from doing business with Texas public entities. Additionally, litigation filed by Texas last year alleges that BlackRock ran afoul of antitrust law. Both actions are retaliation for BlackRock’s participation in organizations like the Net Zero Asset Managers (NZAM). Earlier this year, BlackRock caved to anti-ESG pressures and left the NZAM, resulting in NZAM’s collapse. As a reward for leaving, Texas removed BlackRock from the banned list, with ESG Today reporting:
“The Comptroller’s office listed a series of moves by BlackRock that led to its removal from the list, including the investment manager’s decision to exit the Net Zero Asset Managers (NZAM) initiative and to reduce its participation in Climate Action 100+, as well as reducing the number of fund offerings that prohibit investment in oil and gas.”
We saw Texas offer a similar reward for Vanguard when they left NZAM back in 2023. Despite being back in the Texas Comptroller’s good graces, both Vanguard and BlackRock continue to face antitrust litigation targeting their past participation in climate pacts. Last week, BlackRock filed a motion to dismiss the case, as the Financial Times reports:
“Lawyers for BlackRock and other asset managers argued in a Texas courtroom that there was no evidence they directly sought to limit coal output or work together to advance policies to reduce carbon emissions.”
So the big question is, what gives? If Texas got what it wanted and successfully shooed BlackRock away from NZAM, why continue to pursue antitrust litigation? The answer may be twofold. One, there may be an intent to “salt the earth” and punish BlackRock for participating in NZAM in the first place. Additionally, The Lone Star State may be trying to create a new precedent for antitrust law. Legal scholars question the viability of such an antitrust suit, and Texas might just be seeing what it can get through the courts. If BlackRock’s motion to dismiss is denied, then a lengthy and costly discovery period will begin. This alone might provide enough ammunition to dissuade asset managers from participating in any further climate pacts.
Members can learn more about ESG litigation here.
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