Some of the largest investors in the world bought shares in coal companies to force them to produce less coal?
An unusual demand in Texas states that investment companies such as Blackrock, Vanguard and State Street did exactly that, coluding illegally with each other to reduce coal production as part of a conspiracy to combat climate change.
In a federal court in Texas on Monday, a Blackrock lawyer told a judge that claims “challenge economic reality” and that the lawsuit must be dismissed. “The complaint ignores that the coal market has decreased for decades for a series of reasons long before this alleged conspiracy,” said Gregg Costa, a lawyer for the firm Gibson Dunn, speaking on behalf of the three defendants.
A Texas lawyer, who filed the lawsuit at the end of last year along with another 10 states, said Blackrock Executive Director, Laurence D. Fink, has written in the past that corporations should establish objectives for greenhouse gas reductions. For coal companies, that means “reduce production,” said the lawyer Brian Barnes of the Cooper & Kirk firm.
Texas, an important state -producing state, has taken aggressive measures against financial companies on climatic problems, including the promulgation of a law that prohibits state entities from doing business with investment companies that the comptroller, according to the comptroller, are boycotting energy companies. In January, Texas Attorney General Ken Paxton, and another 10 state general prosecutors sent a letter to financial institutions that warn that their policies on climate and the environment, as well as diversity, “could lead to application actions.”
As power has changed in Washington, financial firms have backed their messages and participation in climate action groups. The complaint in the case of Texas said that Blackrock and State Street had already retired from a commercial association known as 100+ Climate Action. (Vanguard had not been a member). Companies have also left the Net Zero Asset Managers initiative, which had been a goal of right criticism.
Last week, Texas Comptroller, Glenn Hegar, eliminated Blackrock from the list of companies that his office had accused of boycotting the oil and gas industry. The blacklist prohibits retirement funds for Texas public employees to invest with companies. Mr. Hegar indicated the outputs of the company of climatic networks in the announcement.
On Monday, Mr. Costa asked Judge Jeremy D. Kernodle in the United States District Court for the Eastern District of Texas to dismiss the complaint. He said that allowing the case would continue to impose large financial burdens on the defendants, and also the coal companies in question, since they went through the discovery process and that require a lot of time and in the exchange of information on evidence and witnesses that would be used in the trial.
Mr. Costa said there was no allegation that the defendants had taken specific measures to reduce coal production. He added that coal was just a small part of the portfolios of asset administrators.
Mr. Barnes, the lawyer who represents the states, said a letter from Mr. Fink, Blackrock’s executive director and once an open defender of climate action, asking companies to establish objectives for greenhouse gas reductions. He said that the companies “had a policy declared basically their actions to try to boost the ‘carbon intensive industries’ to establish objectives aligned with the Paris Agreement”, referring to the pact between the nations to limit the damage of climate change by reducing greenhouse gases.
The burning of fossil fuels such as coal produces carbon dioxide that dangerously heats the planet because, once released in the atmosphere, it acts like a blanket, catching the heat of the sun.
David Lawrence, Director of Policies of the Antimonopoolio Division of the Department of Justice, also appeared before the judge on behalf of his agency and the Federal Commission of Commerce. The agencies wrote in a brief before court last month that alleged actions could reduce competition and increase prices for consumers.
Before the judge, he presented a scenario in which an influential investment company could encourage airlines not to offer so many flights, or a wireless company so as not to give free phones. “We believe that it is critically necessary for damage to consumers who would result,” he said.
In a statement after that report was presented, Blackrock said the government’s support for the “without foundation” case undermined the established objective of the Trump administration of American energy independence. “This case is trying to rewrite the antimonopoly law and is based on an absurd theory that coal companies conspired with their shareholders to reduce coal production,” the statement said.
When the judge concluded the hearing, he said he had actions, like many Americans, in Vanguard funds. He said he did not believe that he prevented him from hearing the case, but was revealing the information in case any of the parties argued otherwise.
