Alabama Attorney General Steve Marshall has announced a settlement with The Vanguard Group Inc., a global investment company, in an antitrust lawsuit related to environmental, social, and governance (ESG) initiatives. The lawsuit, which was filed by Alabama and other states, accused Vanguard, along with BlackRock and State Street, of using ESG principles to influence the coal industry and allegedly increasing energy prices for consumers.
According to the coalition of attorneys general, the asset managers were accused of using customer accounts to advance environmental goals rather than focusing solely on maximizing returns for investors. The complaint alleges that by restricting the supply of coal through illegal agreements or pledges, these companies engaged in anticompetitive practices that harmed both investors and U.S. energy companies.
“Wall Street has no business using working people’s retirement accounts to wage war on American energy. When you hand your retirement to an investment firm, you’re trusting them with your family’s future, not handing them a political blank check,” Attorney General Steve Marshall said. “This settlement sends an unambiguous message that coordinated efforts to subordinate investor returns to political objectives will face legal consequences. Today, I’m glad that Vanguard has agreed to refocus on financial performance, not politics, but we still have work to do in our action against BlackRock and State Street.”
The settlement requires Vanguard not to use its shareholdings to direct portfolio companies’ business strategies or threaten divestment unless those companies comply with specific actions. It also prohibits Vanguard from nominating directors or shareholder proposals at its portfolio companies based on ESG objectives. In addition, Vanguard will pay $29.5 million to the participating states.
Another part of the agreement is that Vanguard will allow proxy voting for investors in funds representing at least half of assets invested in U.S. equity funds it advises. This change aims to give customers more influence over decisions made by portfolio companies regarding priorities like profitability versus ESG goals.
The case began as a Texas-led multistate lawsuit filed in November 2024. A district court previously denied motions from defendants seeking dismissal of the case.
Attorney General Marshall leads Alabama’s chief law enforcement agency according to the official website, which represents the state in legal matters across all counties and works on initiatives aimed at reducing violent crime and supporting victims statewide as detailed by the office. Marshall has served as Alabama’s forty-eighth attorney general since February 2017 according to official records.
The litigation against BlackRock and State Street remains ongoing.