Texas Attorney General Ken Paxton announced a lawsuit against BlackRock, State Street Corporation, and Vanguard Group, accusing these financial giants of engaging in a conspiracy to manipulate the energy markets. Allegations detailed by Paxton claim that through significant stockholdings in major coal producers, these investors wielded their collective power to control company policies, aiming to slash coal output to meet their environmental objectives. By pushing to halve coal production by 2030, the firms sought alignment with “green energy” goals, as outlined in their 2021 announcements, according to the Texas Attorney General's Office news release.
In the lawsuit, filed yesterday, Paxton claims these actions have hiked up electricity costs nationwide. Acting on their commitments to the Climate Action 100 and the Net Zero Asset Managers Initiative, BlackRock, Vanguard, and State Street effectively signaled their intention to reduce thermal coal output. This move, Paxton argues, predictably led to increased electricity prices for American consumers. Suing the firms also, the attorney general contends these companies deceived their own investors, many of whom had chosen non-ESG funds seeking maximum profits, not anticipating ESG strategies pursued notwithstanding the defendant's representations to the contrary.
Moreover, the suit accuses the asset managers of deliberately restricting supply to bolster revenues, breaking multiple State and federal laws in the process. "Their conspiracy has harmed American energy production and hurt consumers. This is a stunning violation of State and federal law," said Attorney General Paxton, as the coalition of 10 other States joined Texas in the legal battle. The information was detailed by the Texas Attorney General's Office.
The case, which is bolstered by outside counsel from The Buzbee Law Firm and Cooper & Kirk, brings into sharp relief the ongoing debate about the role of large investors in influencing market trends and public policy. Paxton and his allied states believe that Texas will not tolerate the illegal weaponization of the financial industry in service of what has been called a destructive, politicized 'environmental' agenda by the attorney general. Additional details of the lawsuit include assertions that the asset managers formed a cartel to rig the coal market, artificially reducing the energy supply to raise prices.
