Texas and 10 other Republican-led states are suing BlackRock, State Street and Vanguard
Texas Attorney General Ken Paxton and 10 other states have filed a federal lawsuit against BlackRock Inc., Vanguard Group Inc., and State Street Corp., alleging that the asset managers violated antitrust laws by driving up electricity prices through their investment strategies. The lawsuit, filed Wednesday in Texas, represents a significant legal challenge to the environmental, social, and governance (ESG) investment movement.
The states claim that the firms used their market influence and participation in climate-focused coalitions to pressure coal producers to cut output, leading to energy shortages and higher electricity bills for residents in Texas and other affected states. The lawsuit argues that electricity prices should be set by competitive markets, not influenced by large asset managers with environmental agendas.
“Competitive markets — not the dictates of far-flung asset managers — should determine the price Americans pay for electricity,” the complaint states.
The Republican-led coalition, which includes West Virginia and Montana, is seeking a court order to prevent the three firms from using their stakes in coal companies to vote on shareholder resolutions or take other actions that could limit coal production and stifle market competition.
BlackRock responded to the lawsuit by defending its practices, stating that the claims “undermine Texas’ pro-business reputation” and that the idea it would invest in companies with the intent to harm them is “baseless and defies common sense.” Vanguard declined to comment, while State Street has not yet issued a response.
The lawsuit follows years of scrutiny from GOP officials targeting Wall Street’s climate-related investment strategies. Critics argue that ESG initiatives prioritize political goals over financial returns. During last year’s shareholder voting season, state attorneys general warned that Americans’ savings should not be used to advance political agendas.
Climate advocates counter these claims, stating that addressing environmental risks is part of investors’ fiduciary duty, as these risks have direct financial implications.
In a statement accompanying the lawsuit, Paxton accused the firms of illegally manipulating the financial industry to serve a politicized environmental agenda. “Their conspiracy has harmed American energy production and hurt consumers,” he said. Paxton also cited the Clayton Antitrust Act of 1914, which prohibits acquiring shares in a manner that substantially reduces competition, as the basis for the lawsuit.