Even before Donald Trump has returned to the White House and the Republicans take control of Congress, the war on “woke capitalism” in the US is intensifying.
Late last week Texas, along with 10 other Republican-led states, sued BlackRock, State Street and Vanguard, claiming they had breached antitrust laws by conspiring to boost electricity prices by curtailing coal supplies.
Larry Fink’s BlackRock is the world’s biggest fund manager. BlackRock responded to the lawsuit by saying that the suggestion that it had invested in companies with the goal of harming them was baseless and defied common sense.Credit: Bloomberg
They had done this, the lawsuit alleges, by pressuring coal companies to cut their output, causing consumers in Texas and the other states to pay higher power bills, in pursuit of a “destructive, politicised, environmental agenda.”
Texas attorney-general, Ken Paxton, said the state would not “tolerate the illegal weaponisation of the financial industry.”
Texas has been one of the most aggressive of the Republican states railing against “woke” capitalism, or the taking into account of environmental, social and governance (ESG) and diversity, equity and inclusion (DEI) issues when they invest.
The waging of the culture wars in states like Texas and Florida has seen the politicisation of ESG and DEI elevated over financial common sense.
In 2021, Texas banned a number of the major Wall Street banks from underwriting state and municipal bond issues.
The withdrawal of the major banks forced the issuers to negotiate bond sales rather than conduct auctions, with the smaller pool of underwriters and the loss of a more competitive process that the Texas Chamber of Commerce earlier this year estimated had cost the state about $US270 million ($416 million) a year in extra interest costs.
Texas also imposed bans on fund managers offering ESG products, which included BlackRock, Vanguard and State Street, which denied the state’s pension funds access to the........