A lawyer representing BlackRock told a U.S. federal court on Monday that accusations by Republican-led states alleging asset managers breached antitrust laws through climate-related collaboration were not “plausible.” The statement came as BlackRock, alongside Vanguard and State Street, sought to have the high-profile case dismissed.
The lawsuit, brought by Texas and 12 other Republican states, contends that the asset managers’ involvement with climate-focused industry groups led to reduced coal production and a subsequent rise in energy prices. Filed last November, the case claims that such engagement amounts to coordinated action in violation of competition laws.
Gregg Costa, counsel for BlackRock, argued that the evidence presented by the states was insufficient. “It’s hard to see how this alleged conspiracy is even possible, let alone plausible,” he said. Costa noted the firms did not uniformly vote against any coal company directors during the period in question, nor had the plaintiffs produced whistleblower testimony or internal communications to substantiate claims of collusion.
Vanguard’s lawyer, Robert Wick, added that while the firm had engaged with coal companies, this was part of its fiduciary duty. “There are no allegations that Vanguard ever used its shares to coerce or pressure a coal company to cut its production,” he told the court.
However, Brian Barnes, representing the states, maintained that even non-binding industry statements could influence corporate strategy. “Jawboning by these defendants as to decisions about market strategy just very clearly has the potential to influence output decisions at the coal company,” he said.
The case is being closely watched due to its potential ramifications for the broader asset management industry, particularly concerning environmental, social and governance (ESG) practices. BlackRock, Vanguard, and State Street collectively manage around $27 trillion in assets.
One proposed remedy from the plaintiffs includes forcing the firms to divest from coal companies—a move BlackRock has argued would damage companies’ access to capital and drive up energy prices.
Judge Jeremy Kernodle of the U.S. District Court for the Eastern District of Texas said he would consider the arguments and issue a decision in due course. Noting that he owns shares in index funds managed by the firms, including the Vanguard S&P 500 ETF and BlackRock’s iShares Core S&P Small Cap fund, the judge stated this did not require recusal but invited objections within two weeks.
