BlackRock, Vanguard, and State Street, three of the largest asset management firms in the world, have requested a federal court in Texas to dismiss a groundbreaking climate-related antitrust lawsuit. The lawsuit accuses these firms of conspiring through climate activism to reduce coal output, but the defendants argue that the claims are based on “half-baked and untested” legal theories.
In a motion filed with the court, the asset managers assert that the lawsuit lacks sufficient evidence to support the allegations. “To find that Plaintiffs have stated an antitrust claim on these alleged facts requires contorting the law in a way that would harm both coal companies and individual investors,” the firms stated. They urged the court to reject the case, calling it an “adventurous attempt to rewrite antitrust law.”
The case, led by Texas Attorney General Ken Paxton, is attracting significant attention due to its potential impact on environmental, social, and governance (ESG) practices. The lawsuit, which involves 13 plaintiffs, claims that the fund managers conspired to suppress coal production by using their influential proxy votes to push for environmental initiatives. However, the firms contend that the plaintiffs fail to demonstrate any direct actions taken to curb coal output. The asset managers argue that no evidence exists showing that they instructed any coal company to reduce production.
Legal experts are closely following the case. Michael Carrier, a professor at Rutgers Law School, pointed out that the defendants’ response strongly rebuffs the claims, particularly by highlighting the lack of communication and differing voting behaviors between the companies. “This is a hard-hitting response that levels some strong rebuttals of the complaint,” Carrier said, noting the difficulty plaintiffs would face in proving that the companies colluded.
The lawsuit is part of a broader political push from conservative U.S. politicians, particularly from energy-producing states, who have raised concerns about the role of major asset managers in pushing for climate-related goals. These politicians argue that such efforts amount to collusion, particularly when firms collaborate on net-zero initiatives. With combined assets exceeding $26 trillion, BlackRock, Vanguard, and State Street wield significant influence in U.S. corporate governance, including the election of directors, executive compensation, and the shaping of ESG policies.
In their joint motion, the companies emphasized that their activities—such as voting on corporate boards and ESG issues—are commonplace in the industry and essential for providing low-cost index funds, which millions of Americans rely on for retirement savings and other financial goals. They clarified that while BlackRock and State Street had voted against reelecting some coal company directors, they did so individually and not in a coordinated manner. Furthermore, Vanguard did not vote against the management of any coal company.
The defendants also pointed out that coal output has actually increased since 2021, despite the allegations in the complaint, suggesting that their proxy votes did not align with any reduction in coal production.
“There is not the slightest indication that any Defendant was prodding the coal companies to reduce output, much less that all of them were doing so in collaboration,” the motion stated.
The case, titled Texas et al v BlackRock Inc et al, is currently pending before the U.S. District Court for the Eastern District of Texas (No. 24-00437).
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