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(Bloomberg) -- BlackRock Inc., Vanguard Group and State Street Corp. said a lawsuit led by Texas over allegations that they colluded to influence power prices was “farfetched.”
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The money-management giants, with combined assets of more than $20 trillion, said Monday in a motion to dismiss in federal court in Texas that the antitrust claims against them contain “no plausible facts,” lack evidence of coordinated actions and fail to show how the companies control coal output.
In one of the highest-profile lawsuits against the investment industry, Texas Attorney General Ken Paxton and several other states claimed in November that BlackRock, Vanguard and State Street, as part of their green agenda, used their market clout and membership in climate groups to pressure coal producers to cut production. As a result, Texans and residents in other states had to pay higher power bills.
The asset managers said in their filing on Monday that their index-tracking funds have “non-controlling” stakes in several publicly traded coal companies and the firms never voted as a block against reelecting directors of the companies.
The plaintiffs, comprised of Texas and several other states, don’t “identify any time that defendants communicated with each other on any topic, much less a time they agreed to suppress coal output,” the companies said in their filing. The firms said the last 20 years “haven’t been good to the coal industry,” but production has recently increased.
Republican lawmakers have been critical of Wall Street’s environmental, social and governance efforts. They have launched probes and introduced anti-ESG bills — many of which have failed — and some states pulled money from investment firms. In response, US banks and asset managers are talking much less about ESG topics these days, and some have left climate groups.
In an unrelated case, a New York judge dismissed a lawsuit last year by a conservative group against city pension funds over their decision to sell billions of dollars in fossil-fuel investments, in a rare bright spot for proponents of environmental and social investing.
“Commonplace activities like offering index funds that may invest in multiple companies in the same industry, voting in corporate elections, or meeting with corporations to understand their governance practices aren’t evidence of an anticompetitive scheme,” BlackRock and the two other firms said in their filing. “They are the core ingredients, allowing asset managers to provide the low-cost funds that millions of Americans rely on to save for retirement and other purposes.”