GOP States Sue BlackRock, State Street, Vanguard Over ESG

BlackRock, State Street and Vanguard have been sued by Texas and 10 other Republican-led states, which said the large asset managers violated antitrust law through climate activism that resulted in reduced coal production and higher energy prices.

Wednesday's complaint filed in the federal court in Tyler, Texas, is among the highest profile lawsuits targeting efforts to promote environmental, social and governance goals, or ESG.

Republicans have long explored using U.S. antitrust laws to target alleged collusion among large fund managers to advance climate-related goals.

BlackRock, State Street and Vanguard did not immediately respond to requests for comment.

The defendants were accused of exploiting their status as shareholders to pressure coal companies to reduce output.

They were also challenged over their membership in the Net Zero Asset Managers Initiative, which Vanguard has left, and BlackRock and State Street's involvement in Climate Action 100+, from which they have withdrawn.

BlackRock was also accused of "actively deceiving" investors about its non-ESG funds by representing they would be dedicated solely to enhance shareholder value, when it allegedly used all its holdings to advance its climate goals.

"The American consumer is entitled to enjoy the fruits of free markets, vigorous competition, and (in the case of BlackRock) honest investment managers," the complaint said.

"Competitive markets — not the dictates of far-flung asset managers — should determine the price Americans pay for electricity," it added.