As a non-partisan, non-profit organization dedicated to advocating for seniors, we believe in market-based solutions, protecting the right to freedom of speech, and supporting limited but effective government. In light of these principles, a multi-state lawsuit filed by Texas and several other states against major asset managers accusing them of conspiring to reduce coal production is deeply troubling. While the lawsuit aims to address perceived market manipulation, the remedies it seeks contradict President Trump’s energy policy and could have unintended consequences for our domestic energy investments and infrastructure development.
Filed in November 2024 by eleven GOP attorneys general, the lawsuit alleges these asset managers – BlackRock, State Street, and Vanguard – used their substantial holdings in coal companies to push for a significant reduction in coal output by 2030. The complaint claims this coordinated effort was made through climate organizations that the asset managers at the time participated in but have largely quit – such as Climate Action 100+ and the Net Zero Asset Managers Initiative – artificially constrained coal supply and led to higher energy prices for consumers.
President Trump’s recent announcements around energy emphasizes “energy dominance,” advocating for the expansion of fossil fuel production, including coal, to ensure energy independence and economic growth (the President famously dubbed it the “Beautiful Clean Coal Industry” when he talked about the attributes of coal). By targeting asset managers, this lawsuit actually undermines these objectives. Instead of fostering a competitive market where all energy sources are chosen based on efficiency and cost-effectiveness, the lawsuit could inadvertently stifle investment in the energy sector. Investors may become wary of engaging in energy projects if they fear legal repercussions for promoting certain energy sources over others.
On top of that, the lawsuit could actually lead to downward pressure on coal companies by having these index fund investors divest and cap their holdings of the publicly traded coal companies. Ironically, this remedy of forced divestment is what climate activists and ESG proponents have been encouraging for years. Energy projects – particularly those involving fossil fuels – require significant capital and long-term planning. So, if investors perceive that supporting these projects could lead to legal challenges or reputational risks, they may redirect their investments elsewhere. This shift could delay or halt necessary upgrades to the nation’s energy infrastructure, impacting energy reliability and potentially increasing costs for consumers.
Modernizing and expanding energy infrastructure is crucial for meeting growing demand and keeping energy affordable for our nation’s seniors. American energy infrastructure is in dire need of updates as much of our electric grid was built in the 1960s and ‘70s and is struggling to meet modern demands. Adding in the vast energy needs for AI development, our grid just doesn’t stand a chance. Even without success of this lawsuit, the uncertainty introduced by legal actions like this can deter both public and private sector investments in infrastructure projects. Without a clear and stable regulatory environment, stakeholders may hesitate to commit resources to long-term energy projects, potentially leading to outdated infrastructure and energy shortages.
While the intention behind this state driven lawsuit may be to protect consumers from perceived market manipulation, it inadvertently contradicts the principles of market-based solutions and limited government. By targeting asset managers for promoting supposed ESG criteria, the lawsuit could discourage investment in the energy sector, hindering necessary infrastructure upgrades and potentially leading to higher energy costs itself.
The broader implications of these legal actions must be considered. We should instead be supporting common-sense policies, like President Trump’s, that will foster a competitive and stable energy market and lead to American energy dominance.
