BlackRock, Vanguard, and State Street each hold substantial shares of publicly-traded corporations, including coal producers.

A group of red state attorneys general is accusing the world’s largest asset managers of violating antitrust law by going after the coal industry in an effort to meet green climate objectives.

Texas attorney general Ken Paxton (R) and ten others filed a lawsuit against BlackRock, Vanguard and State Street for alleged anti-competitive behavior against coal producers. The attorneys general claim the asset managers had hoped to get closer to achieving net-zero carbon emissions goals such as cutting carbon output in half.

“Rather than individually wield their shareholdings to reduce coal output, therefore, Defendants effectively formed a syndicate and agreed to use their collective holdings of publicly traded coal companies to induce industry-wide output reductions,” the complaint reads.

“Defendants have used that collective power—by proxy voting and otherwise—to pressure the major coal producers to reduce production of coal, and in particular production of the thermal coal used to generate the electricity that powers American homes and businesses,” it adds.

Attorneys general from Alabama, Arkansas, Indiana, Iowa, Kansas, Missouri, Montana, Nebraska, West Virginia, and Wyoming partnered with Paxton on the case filed in Texas federal court. The lawsuit specifically accuses the asset managers of violating Section 7 of the Clayton Act, a law passed more than a century ago to curtail unfair business practices.

BlackRock, Vanguard, and State Street are the three largest asset managers in the world and each of them hold substantial shares of publicly-traded corporations, including coal producers. The lawsuit alleges the firms have successfully pressured coal producers they own stakes in to reduce overall output, even when coal prices were rising considerably. The alleged scheme has reduced the supply of coal and lowered competition in coal markets while raising energy prices and producing enormous profits for the asset managers.

“BlackRock is deeply invested in Texas’ success. On behalf of our clients, we have billions invested in Texas energy, partnering with the state to attract investments into the Texas power grid and helping millions of Texans retire with dignity,” BlackRock told National Review in a statement.

“BlackRock’s holdings in energy companies are regularly reviewed by federal and state regulators. We make these investments on behalf of our clients, and our focus is on delivering them financial returns. The suggestion that BlackRock has invested money in companies with the goal of harming those companies is baseless and defies common sense,” the asset manager said.

BlackRock is a one of the largest corporations to embrace environmental, social, and governance (ESG) investing, an investment philosophy that seeks to square progressive policy goals with returns for clients. Multiple Republican-led states have accused the firm of misleading investors about its climate investment goals and other red states have also pushed back against BlackRock’s ESG approach.

Vanguard and State Street did not respond to requests for comment.

Once popular on Wall Street, ESG has faced sustained criticism from ideological opponents and those who believe firms should stick to maximizing investment returns. The Biden administration’s attempt to implement ESG through Securities and Exchange Commission regulations has also stalled due to legal challenges.

“Texas will not tolerate the illegal weaponization of the financial industry in service of a destructive, politicized ‘environmental’ agenda. BlackRock, Vanguard, and State Street formed a cartel to rig the coal market, artificially reduce the energy supply, and raise prices,” Paxton said in a statement to NR. “Their conspiracy has harmed American energy production and hurt consumers. This is a stunning violation of State and federal law.”

The attorneys general are seeking an injunction requiring the companies to divest from the coal industry and to prevent them from engaging in similar alleged anti-competitive practices in other markets.

“Today’s lawsuit is a bombshell to the ESG asset manager cartel,” said Will Hild, executive director of Consumers Research, a consumer protection group opposed to progressive corporate activism. Hild is a particularly outspoken critic of BlackRock and its longtime chief executive Larry Fink.

“According to the allegations, BlackRock, Vanguard, and State Street’s shameful collusive behavior not only deceived investors but also harmed millions of American families by raising costs and contributing to record inflation. As we’ve been saying all along, ESG isn’t an investment strategy, it’s a conspiracy against the public,” Hild said.