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Posted On: 12/05/2024 4:42:50 PM
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State Street, BlackRock Sued by Texas Over Allegations of Market Disruption
ESG has become very popular in the recent years, particularly when it comes to the investment practices of institutions. During the 2023 Finance Magnates London Summit, experts from various parts of the globe met to discuss this subject.
Salvus Fund’s Risk and Compliance Director Evdokia Pitsillidou explained that ESG’s primary objective was to transition to a more environmentally friendly and sustainable financial system.
Despite this being the goal, the state of Texas as well as 10 other GOP-led states have filed a lawsuit in federal court accusing Vanguard, BlackRock and State Street of using ESG investment strategies to disrupt coal markets. This lawsuit represents the latest pushback against ESG investing led by Republicans, which critics argue is a politically motivated disruption to conventional market dynamics.
The objective of the plaintiffs is to bar asset managers from using investments to sway energy market policies. This is in addition to demanding civil penalties for violating consumer protection laws and federal antitrust laws. The lawsuit is being led by Ken Paxton, the Attorney General of Texas.
In the suit, the states claim that asset managers used their influence to drive up prices of energy and reduce the production of coal, which violated antitrust laws. The plaintiffs also accuse the financial companies of acquiring substantial stakes in major coal firms like Arch Resources and Peabody Energy.
They allege that the companies used these holdings, which represent more than 30% of the American coal market, to pressure producers to decrease their output of coal in favor of clean energies. The lawsuit claims that this coordinated move was part of commitments made via initiatives like Climate Action 100+ and Net Zero Asset Managers Initiatives, which are focused on aligning investments with climate objectives.
The plaintiffs claim that this strategy has burdened consumers with higher energy costs as well as harmed competition. In addition to this, the states claim that the past actions of these organizations may still cause problems. This is despite the fact that firms like Vanguard have withdrawn from ESG initiatives.
Furthermore, the lawsuit alleges that BlackRock misled investors by using non-ESG funds to advance environmental goals, despite its promise to prioritize value generation for shareholders.
State Street and BlackRock have dismissed these claims, noting that they’re baseless. In a statement, BlackRock argued that the lawsuit was unfounded, adding that it undermined the reputation of the state of Texas as a pro-business state.
This isn’t the first time Texas has gone up against ESG either, having already advocated for additional oversight of asset managers and restricted the use of ESG factors in state investments.
Individual companies like First Tellurium Corp. (CSE: FTEL) (OTCQB: FSTTF) are unlikely to be impacted by the actions taken by states like Texas which are trying to peg back the progress of ESG since they aren’t investment firms and are free to implement ESG principles without attracting the kind of attention that major funds like BlackRock attract from those opposed to ESG.
NOTE TO INVESTORS: The latest news and updates relating to First Tellurium Corp. (CSE: FTEL) (OTCQB: FSTTF) are available in the company’s newsroom at https://ibn.fm/FSTTF
Please see full terms of use and disclaimers on the ESGWireNews website applicable to all content provided by ESG, wherever published or re-published: https://www.ESGWireNews.com/Disclaimer
ESG has become very popular in the recent years, particularly when it comes to the investment practices of institutions. During the 2023 Finance Magnates London Summit, experts from various parts of the globe met to discuss this subject.
Salvus Fund’s Risk and Compliance Director Evdokia Pitsillidou explained that ESG’s primary objective was to transition to a more environmentally friendly and sustainable financial system.
Despite this being the goal, the state of Texas as well as 10 other GOP-led states have filed a lawsuit in federal court accusing Vanguard, BlackRock and State Street of using ESG investment strategies to disrupt coal markets. This lawsuit represents the latest pushback against ESG investing led by Republicans, which critics argue is a politically motivated disruption to conventional market dynamics.
The objective of the plaintiffs is to bar asset managers from using investments to sway energy market policies. This is in addition to demanding civil penalties for violating consumer protection laws and federal antitrust laws. The lawsuit is being led by Ken Paxton, the Attorney General of Texas.
In the suit, the states claim that asset managers used their influence to drive up prices of energy and reduce the production of coal, which violated antitrust laws. The plaintiffs also accuse the financial companies of acquiring substantial stakes in major coal firms like Arch Resources and Peabody Energy.
They allege that the companies used these holdings, which represent more than 30% of the American coal market, to pressure producers to decrease their output of coal in favor of clean energies. The lawsuit claims that this coordinated move was part of commitments made via initiatives like Climate Action 100+ and Net Zero Asset Managers Initiatives, which are focused on aligning investments with climate objectives.
The plaintiffs claim that this strategy has burdened consumers with higher energy costs as well as harmed competition. In addition to this, the states claim that the past actions of these organizations may still cause problems. This is despite the fact that firms like Vanguard have withdrawn from ESG initiatives.
Furthermore, the lawsuit alleges that BlackRock misled investors by using non-ESG funds to advance environmental goals, despite its promise to prioritize value generation for shareholders.
State Street and BlackRock have dismissed these claims, noting that they’re baseless. In a statement, BlackRock argued that the lawsuit was unfounded, adding that it undermined the reputation of the state of Texas as a pro-business state.
This isn’t the first time Texas has gone up against ESG either, having already advocated for additional oversight of asset managers and restricted the use of ESG factors in state investments.
Individual companies like First Tellurium Corp. (CSE: FTEL) (OTCQB: FSTTF) are unlikely to be impacted by the actions taken by states like Texas which are trying to peg back the progress of ESG since they aren’t investment firms and are free to implement ESG principles without attracting the kind of attention that major funds like BlackRock attract from those opposed to ESG.
NOTE TO INVESTORS: The latest news and updates relating to First Tellurium Corp. (CSE: FTEL) (OTCQB: FSTTF) are available in the company’s newsroom at https://ibn.fm/FSTTF
Please see full terms of use and disclaimers on the ESGWireNews website applicable to all content provided by ESG, wherever published or re-published: https://www.ESGWireNews.com/Disclaimer
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