ETFs: asset management giants accused of climate collusion

At the end of last year, a complaint filed in Texas, joined by ten other states, targeted three of the world's largest investment companies. Their alleged wrongdoing was to have acted in concert to encourage coal companies to reduce production in order to generate profits. A rather unusual indictment.

When you manage trillions, attacks come thick and fast. Larry Fink, CEO of BlackRock, the world's largest asset manager, formerly accused of hypocrisy on ESG issues, is now being labeled a climate activist.

An agreement to reduce supply?

At the heart of the complaint is the idea that an implicit agreement between BlackRock, Vanguard, and State Street has slowed coal production, leading to higher prices... and profits at the expense of American consumers.

Although they are among the three largest shareholders in ExxonMobil, Marathon Petroleum, Phillips 66, Valero Energy and many others, the three companies deny any collusion. They insist that their votes at shareholder meetings have remained consistent and that no pressure has been exerted on companies in the sector.

A political as well as a legal complaint

The highly political case has been taken up with fervor by the Trump administration. FTC Chairman Andrew Ferguson denounced an attempt to "block U.S. coal production in the name of climate alarmism," accusing the companies of "taking money out of the pockets of American consumers and putting it in their own pockets."

The statement is in line with Donald Trump's stated strategy of defending coal, accused of being a victim of ESG abuses, in the name of energy sovereignty.

Potentially major consequences

If the court rules in favor of the federal government, the case could set a precedent. It would raise a fundamental question: can investors with significant stakes in several companies in the same sector be accused of harming competition?

An extreme but legally possible scenario would see these companies having their voting rights capped in industries deemed strategic.

The three groups have asked the federal judge to dismiss what they consider to be an abusive complaint. They argue that the action is based on a biased interpretation of antitrust law, targeting passive investors who, by definition, have no direct control over the companies they own. In their view, the government's logic amounts to accusing asset managers of harming competition in all sectors of the economy.

A story that seems absurd at first glance, but one that could have serious repercussions if it gains momentum.