Texas said Vanguard Group Inc. agreed to pay a total of $29.5 million to settle a lawsuit brought by a dozen states that accused the asset manager of colluding to manipulate the energy market and reduce coal output.
As part of the deal, Vanguard also will “avoid imposing ESG goals over its customers’ profitability,” according to a statement by Texas Attorney General Ken Paxton’s Office. A court filing Thursday showed Vanguard was dismissed as a defendant in the lawsuit.
Vanguard said in a statement that the decision to settle “allows us to put this distraction behind us and focus on what matters — giving our investors the best chance for investment success.”
The states had also sued BlackRock Inc. and State Street Corp., and that litigation remains ongoing. The suit is one of the most high-profile cases against the beleaguered environmental, social and governance investment strategy.
Paxton sued the asset managers in 2024, claiming they coordinated to pressure coal companies to reduce their production under the guise of pursuing environmental and social investing goals. The firms have been a frequent target of Republican leaders for their voting and investment policies, so much so that they have retreated from ESG in the US.
State Street, in a statement, said the “lawsuit remains baseless and without merit. This settlement does not change that.”
A BlackRock spokesperson declined to comment.
Kansas Attorney General Kris Kobach, who joined Paxton in suing the firms, applauded the settlement and said it shows Vanguard is “committed to real change.”
“This settlement shatters the precedent for big asset managers pushing radical agendas over profits and affordability,” Kobach said in a statement.
Lawyers for the three asset managers told the court in June that there is no evidence that they coordinated investment decisions or that the firms told any coal producer to cut output. They also said they weren’t committed to any policies by participating in the climate groups and that coal output rose in the years covered by the lawsuit.
Still, US District Judge Jeremy Kernodle in Texas ruled in August that most of the claims brought by the states can proceed, including allegations that the asset managers collectively used their stock to attempt to substantially lessen competition.
The case is State of Texas v. BlackRock Inc., 24-cv-00437, US District Court, Eastern District of Texas (Tyler).
Copyright 2026 Bloomberg.
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