The trio titans of the asset management industry have jointly filed a motion to dismiss a lawsuit brought against them by Texas and other Republican-led states.

Summary:

• The lawsuit alleges they conspired to reduce coal production through their climate-focused ESG policies.
• The firms deny the allegations, calling them "half-baked and untested" and filed a motion to dismiss.
• They claim there's no evidence they directly pressured coal companies to reduce output.

The lawsuit alleges that these firms conspired through their climate activism to stifle coal production, a claim the fund managers vehemently deny, labeling it "half-baked and untested."

The lawsuit, spearheaded by Texas Attorney General Ken Paxton, accuses the firms of violating antitrust laws by coordinating their ESG (Environmental, Social, and Governance) policies, specifically in relation to coal companies. The states argue that the fund managers' participation in net-zero industry groups and their proxy voting practices have effectively pressured coal producers to reduce their output.

However, the fund managers, who collectively manage over $26 trillion in assets, argue that the lawsuit is based on flawed legal theories and lacks concrete evidence. They assert that the plaintiffs have failed to provide any instances where they directly instructed a coal company to cut production. In their court filing, they emphasized that "To find that Plaintiffs have stated an antitrust claim on these alleged facts requires contorting the law in a way that would hurt both coal companies and individual investors."

The firms have presented a united front, arguing that their activities are "commonplace" for products like index funds, which are essential for millions of Americans' retirement savings. They contend that their proxy voting records demonstrate a lack of coordination and even instances of divergence. For example, while BlackRock and State Street voted against the reelection of some coal company directors, Vanguard did not. Moreover, even when votes were cast against directors, they were often reelected.

The fund managers also pointed out that coal production has actually increased since 2021, according to the lawsuit's own data, contradicting the claim that their actions have led to a decrease in output. "There is not the slightest indication that any Defendant was prodding the coal companies to reduce output, much less that all of them were doing so in collaboration," the motion states.

The fund managers, in their defense, have emphasized the importance of their role in providing low-cost investment options for millions of Americans. They argue that the lawsuit, if successful, would undermine their ability to fulfill this role and ultimately harm individual investors.