Investment giant BlackRock issues a strong statement following the release of a statement by the U.S. Department of Justice and Federal Trade Commission in support of a Texas-led multistate lawsuit accusing asset managers BlackRock, Vanguard and State Street of using ESG investing to manipulate coal markets, calling the case “baseless,” and “based on an absurd theory.”
The case, launched by Texas Attorney General Ken Paxton and joined by 10 other Republican states in late 2024, claimed that the asset managers acquired large shareholdings in major coal producers in the U.S., and used their combined influence to coerce the companies to cut coal production to accommodate clean energy investment goals, resulting in higher energy costs for U.S. consumers.
The suit alleges that the firms violated the Clayton Act, which prohibits the acquisition of shares of companies in which “the effect of such acquisition may be substantially to lessen competition,” and claims that the firms “effectively formed a syndicate and agreed to use their collective holdings of publicly traded coal companies to induce industry-wide output reductions,” by joining initiatives such as the Net Zero Asset Managers Initiative (NZAM) and Climate Action 100+, noting that each initiative requires commitments from asset managers to engage with portfolio companies to align with climate goals.
Notably, the asset managers have since exited or significantly reduced their participation in the climate initiatives, often citing the group’s overly prescriptive requirements, although the suit claimed that withdrawal “does not change the reality that Defendants’ holdings threaten to substantially reduce competition.”
In a statement released announcing the federal agencies’ filing of a brief supporting the case, FTC Chairman Andrew Ferguson said that the asset managers “allegedly blocked the production of American coal in the name of climate change scaremongering, all so they could take money out of the pockets of American consumers and put it in theirs,” adding that the Trump administration “has vowed to fight left-wing ideologues who seek to make us weaker and poorer under the guise of ESG. “
Similarly, the DOJ’s Assistant Attorney General Abigail A. Slater said:
“We will not hesitate to stand up against powerful financial firms that use Americans’ retirement savings to harm competition under the guise of ESG.”
In its response, BlackRock argued that “the DOJ and FTC’s support for this baseless case undermines the Trump Administration’s goal of American energy independence,” and that the case is trying to re-write antitrust law and is based on an absurd theory that coal companies conspired with their shareholders to reduce coal production.”
While the FTC and DOJ said that their aim is to “protect markets from anticompetitive behavior that raises Americans’ energy bills,” BlackRock claimed that the case would have the opposite effect, arguing that “forcing asset managers to divest from coal companies will harm their ability to access capital and invest in their businesses and employees, likely leading to higher energy prices.”
State Street also issued a statement calling the lawsuit “baseless,” and adding that “additional filings do not change our assessment,” adding that the firm “acts in the long-term financial interests of investors with a focus on enhancing shareholder value.”
In a statement released on the underlying suit, Vanguard similarly argued that the suit “contorts the law in a way that will hurt individual investors,” adding that the firm “will continue to defend our long history of safeguarding and promoting long-term investment returns on behalf of Vanguard-advised funds and their investors.”
