An unusual lawsuit in Texas claims investment firms illegally conspired to fight climate change. On Monday, a judge heard arguments to dismiss the case.
Did some of the biggest investors in the world buy up shares in coal companies to force them to produce less coal?
An unusual lawsuit in Texas claims that investment firms including BlackRock, Vanguard and State Street did just that, illegally colluding with one another to reduce coal production as part of a conspiracy to fight climate change.
In a federal court in Texas on Monday, a lawyer for BlackRock told a judge that the claims “defy economic reality” and that the lawsuit should be dismissed. “The complaint ignores that the coal market has been declining for decades for a host of reasons well before this alleged conspiracy,” said Gregg Costa, a lawyer with the firm Gibson Dunn, speaking on behalf of all three defendants.
A lawyer for Texas, which filed the suit late last year along with 10 other states, said BlackRock’s chief executive, Laurence D. Fink, has written in the past that corporations should set targets for greenhouse-gas reductions. For coal companies, that means “reducing output,” said the lawyer, Brian Barnes of the firm Cooper & Kirk.
Texas, a major oil- and gas-producing state, has taken aggressive action against financial companies over climate issues, including enacting a law that bars state entities from doing business with investment firms that the comptroller says are boycotting energy companies. In January, the Texas attorney general, Ken Paxton, and 10 other state attorneys general sent a letter to financial institutions warning that their policies on climate and environment, as well as diversity, “could lead to enforcement actions.”
As power has changed in Washington, financial firms have walked back their messaging and participation in climate action groups. The complaint in the Texas case noted that BlackRock and State Street had already withdrawn from a trade association known as Climate Action 100+. (Vanguard had not been a member.) The firms have also exited the Net Zero Asset Managers Initiative, which had been a target of criticism from the right.