Texas AG Ken Paxton has filed a lawsuit against BlackRock, Inc., along with State Street Corporation and Vanguard Group, accusing these firms of conspiring to manipulate the energy market
Texas Attorney General Ken Paxton has initiated a lawsuit against BlackRock, along with Vanguard and State Street, accusing these financial giants of conspiring to manipulate energy markets. The lawsuit, which was filed alongside attorneys general from ten other states, alleges that these firms have used their significant stockholdings in major coal producers to exert pressure, aiming to reduce coal output by more than half by 2030 in line with their environmental, social, and governance (ESG) goals. This action, according to the lawsuit, has led to an increase in electricity prices, effectively harming American energy production and consumers by artificially reducing the energy supply and raising costs. Paxton's statement highlights the contention that Texas will not tolerate what he describes as the "illegal weaponization of the financial industry in service of a destructive, politicized 'environmental' agenda," suggesting that these companies have formed a cartel to rig the coal market. BlackRock has responded to these allegations by stating that the suggestion they invested in coal producers to harm those companies is "baseless and defies common sense," and that such lawsuits undermine Texas' pro-business reputation.
The case has been filed in federal court in Tyler, Texas, and represents one of the highest-profile lawsuits against the ESG industry, focusing on how large asset managers might use their influence to affect market competition and consumer prices through their investment strategies. This legal action marks a significant point of contention between state governance and large financial entities over environmental policy execution through investment practices.
The lawsuit claims these firms conspired to artificially restrict the coal market through anticompetitive practices, which involved gaining substantial control over coal companies to influence energy policies. : The firms are accused of deceiving investors by pursuing ESG strategies in funds that were marketed as non-ESG, thereby prioritizing environmental goals over investor profits. The actions of these firms are said to have increased electricity costs for Americans by reducing coal output, which is a key source of energy. The lawsuit alleges violations of federal antitrust laws and Texas' laws against deceptive trade practices.
Paxton is joined by a coalition of 10 other states in this legal action, with outside counsel from The Buzbee Law Firm and Cooper & Kirk.