BlackRock, State Street, Vanguard Face Texas Lawsuit Over Alleged Coal Production Conspiracy

Leading investment firms, including BlackRock, State Street, and Vanguard, face a lawsuit in Texas. Republican-led states accuse them of conspiring to reduce coal production via environmental policies, allegedly driving up energy prices.

Core Accusations

Texas and ten other states accuse BlackRock, State Street, and Vanguard of using their vast holdings in passive index funds to push net-zero carbon emission policies. This alleged influence, they claim, pressured coal companies to reduce output.

The Defense Argument

Attorneys for BlackRock and other asset managers argued before Judge Jeremy Kernodle that the states’ antitrust claims are “unprecedented” and “unsupported,” lacking evidence of direct conspiracy to limit coal output or collaborate on emissions reduction.

Wider Repercussions

Though centered on coal, the lawsuit carries significant implications for the investment sector. A state victory could redefine how passive funds engage with companies and use proxy votes. It also reflects a broader conservative effort to reshape American business law, potentially encouraging similar litigation across industries.

Scrutiny of Environmental Pledges

The states, through attorney Brian Barnes, argued firms’ past environmental commitments, like the Net Zero Asset Managers Initiative (which BlackRock later exited), influenced their actions and reshaped coal. Barnes cited Vanguard’s policy of leveraging shares to steer “carbon-intensive” industries toward Paris Agreement goals, claiming direct stock influence. Vanguard called the complaint legally unsound, vowing to defend its investment strategies.

Next Legal Steps

Judge Jeremy Kernodle has not yet ruled on the dismissal request. Should the case proceed, the asset managers would likely be compelled to disclose internal communications and other pertinent evidence.