Lincoln, Neb. – Nebraska Attorney General Mike Hilgers is spearheading a multi-state lawsuit against three of the world’s largest investment firms, alleging they engaged in anti-competitive practices with detrimental effects on the U.S. coal industry. Hilgers, joined by attorneys general from ten other states, is targeting BlackRock, State Street Corporation, and Vanguard Group in this legal battle.
These asset management giants are accused of manipulating the coal market by collectively wielding their considerable stockholdings in major U.S. coal-producing companies to force a reduction in coal output, aligning business practices with environmental, social, and governance (ESG) goals. According to the allegations, the firms have exerted their influence to decrease thermal coal production by more than fifty percent by the year 2030.
The three firms leveraged initiatives such as Climate Action 100 and the Net Zero Asset Managers Initiative to coordinate their efforts to shrink coal production. The attorneys general argue that these actions have not only restricted supply, leading to elevated electricity costs across the nation, but also misled investors by applying ESG strategies in funds advertised as non-ESG.
Attorney General Hilgers has vocally criticized what he describes as a “radical climate agenda” emanating from both the government and the private sector, which he believes is harmful to Nebraska’s reliance on coal energy. “These ESG agreements inflate the cost of coal-based power, directly impacting the pocketbooks of consumers,” Hilgers stated. He advocates for a market dictated by supply and demand rather than what he perceives as manipulated by financial entities with a political motive.
The complaint further suggests that by artificially restricting electricity supply, these investment firms have positioned themselves to profit from the resulting higher prices. The legal action contends that this orchestrated scarcity violates several federal antitrust laws designed to prevent major shareholders from engaging in competition-reducing activities.
Joining Nebraska in this lawsuit are Texas, Alabama, Arkansas, Indiana, Iowa, Kansas, Missouri, Montana, West Virginia, and Wyoming. These states, many of which also rely heavily on coal for energy, assert that the alleged anti-competitive conduct has national implications, warranting a robust legal response.
The controversy over ESG investing approaches mirrors a broader national debate about the balance between fostering a sustainable environment and supporting traditional energy industries. Proponents of ESG principles argue that they are necessary to transition toward sustainable energy sources, while critics like Hilgers believe they impose undue economic burdens and are often implemented without sufficient transparency.
As the case progresses, it will likely ignite further discourse on the role of large institutional investors in shaping industries critical to the nation’s energy infrastructure and the extent to which their actions align with or contravene market principles.
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