Environmental, social, and governance or (ESG) is a new way of investing in companies based on their commitment to such policies. State attorneys general view this as woke and something that harms investors and consumers.
The Vanguard Group is one of the largest investment management companies in the world, managing over $12 trillion assets globally. They were recently involved a lawsuit with BlackRock and State Street Corporation “for conspiring to artificially constrict the market for coal through anticompetitive trade practices.”
Their goal was to forcefully influence coal companies through their shares to accommodate “green energy” goals by reducing coal output. They also deceived their investors who put money into non-ESG funds, instead using the money to pursue ESG strategies.
Texas Attorney Gen. Ken Paxton announced in a press release that they have reached a settlement with Vanguard. In the settlement, they agreed to stop ESG investments and not direct or attempt to direct business strategy toward any portfolios that reduce carbon emissions and make its proxy voting transparent for investors. Additionally, Vanguard has agreed to provide documents related to its role in climate groups.
Will Hild of Consumers' Research talked with AFN, calling this a big win for consumers. He said this is incredible news because of what was being sued over.
"They were suing over the world's three largest asset managers colluding against coal companies to force those companies to lower coal production. That, of course, raises electricity prices — something that has been the focus of a lot of conversations lately as we have seen people's utility bills going up," states Hild.
He says that monetary damages are now attached to the activities of Vanguard, Black Rock and State Street.
"But also, huge part of this settlement is that they have to hand over communications with the other parties in this little cartel,” informs Hild. “So, we are going to get to see how far down, how much activity BlackRock and State Street, the two remaining defendants, were engaged in here."
Vanguard will pay nearly $30 million as part of the settlement.
Hild comments that could possibly be an extremely cheap way to get out of this lawsuit.
"The two remaining defendants might be paying exponentially more than that because of those activities," says Hild.
Attorney General Ken Paxton (R-Texas) led the coalition that filed the lawsuit.
The other attorneys general include Steve Marshall (Alabama), Tim Griffin (Arkansas), Todd Rokita (Indiana), Brenna Bird (Iowa), Kris Kobach (Kansas), Liz Murrill (Louisiana), Catherine Hanaway (Missouri), Austin Knudsen (Montana), Michael Hilgers (Nebraska), Gentner Drummond (Oklahoma), John McCuskey (West Virginia) and Keith Kautz (Wyoming).
