Montgomery, AL — Steve Marshall announced that Alabama has reached a settlement with The Vanguard Groupfollowing a multistate antitrust lawsuit concerning environmental, social, and governance (ESG) investment initiatives in the coal industry.
The case was part of a Texas-led coalition of states that filed suit in November 2024 against several major asset managers, including BlackRock, State Street, and Vanguard. The lawsuit alleged the firms used their investment influence to advance environmental goals that reduced coal production and increased energy costs.
“Environmental, Social and Governance,” commonly referred to as ESG, refers to a set of investment principles that incorporate factors such as carbon emissions reductions, diversity initiatives, and other social benchmarks into corporate decision-making.
State attorneys general involved in the lawsuit argued that the firms were prioritizing environmental goals over their fiduciary duty to maximize returns for investors. According to the complaint, the coalition alleged that coordinated ESG efforts among the firms effectively restricted coal supply and 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,” Marshall said in a statement. “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.”
Under the settlement agreement, Vanguard has committed that it will not use its shareholdings to direct the business strategies of companies in its portfolio, threaten to withdraw investments to influence corporate actions, or nominate directors or shareholder proposals intended to shape company policies.
The agreement also requires Vanguard to expand proxy voting options for investors. Under the terms of the settlement, proxy voting will be offered to investors in funds representing at least 50 percent of the assets in Vanguard’s U.S. equity funds. The measure is intended to give individual investors greater control over how shares are voted on corporate matters, including decisions related to profitability and ESG policies.
Additionally, Vanguard agreed to pay $29.5 million to the participating states as part of the settlement.
The lawsuit continues against the remaining defendants, BlackRock and State Street. A district court previously denied motions to dismiss the case in 2025, allowing the claims to move forward.
