Group of 11 states sue three major asset managers over coal reduction goals

December 5th, 2024

A coalition of 11 US states has filed a lawsuit against BlackRock, State Street and Vanguard, accusing them of using their shares in major oil companies to restrict the coal market and harm customers.

In the lawsuit, the attorney generals of the states involved claimed that the three asset managers have exploited their collective power through proxy voting and other actions to pressure some of the largest US coal producers to accommodate to green energy goals.

In fact, Texas Attorney General Ken Paxton alleges that the “investment cartel” weaponised their shares to push companies to reduce coal output by more than half by 2030.

The suit further claims that Blackrock, Vanguard and State Street used their memberships in the Climate Action 100 and the Net Zero Asset Managers Initiative to signal their intent to reduce the output of thermal coal, which increased the cost of electricity for Americans.

The lawsuit said: “As demand for the electricity Americans need to heat their homes and power their businesses has gone up, the supply of the coal used to generate that electricity has been artificially depressed—and the price has skyrocketed,

Defendants have reaped the rewards of higher returns, higher fees, and higher profits, while American consumers have paid the price in higher utility bills and higher costs.”

In addition to conspiring to reduce the output of coal, the lawsuit also accuses BlackRock of deceiving investors. It claims that investors who chose non-ESG funds to maximise profits were misled, as these funds were actually pursuing ESG strategies.

As a result, the lawsuit seeks to prohibit the trio from using their shares in coal companies to vote on shareholder resolutions and initiate other steps to stop the restraint of trade and commerce.

It also claims that their actions violated multiple federal laws, including Texas’ antitrust and deceptive trade practices laws, that prevent major shareholders from using their shares to reduce competition or engage in other anticompetitive practices.

Minerva’s blog focuses on the latest developments in ESG investing and stewardship. Minerva is a global provider of sustainable stewardship solutions with over 25 years of expertise. Minerva empowers investors by providing essential tools, including ESG research and data, enabling them to navigate the intricate landscape of stewardship and proxy voting, whilst ensuring their decisions are well-informed and aligned with sustainable principles.

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