Vanguard has agreed to pay USD 29.5 million to Texas and ten other Republican-led states to settle antitrust litigation alleging that the asset manager colluded with peers to constrict the coal market through coordinated ESG stewardship activities. The settlement, finalised in February 2026, requires Vanguard's United States businesses to refrain from joining groups with climate-focused investment or stewardship objectives and to observe passivity commitments that limit how the fund manager engages with portfolio companies on environmental and social matters going forward.
Under the passivity commitments agreed as part of the settlement, Vanguard is explicitly prohibited from advocating to portfolio companies that they reduce their carbon emissions and from using the threat of divestment as a lever in environmental and social stewardship engagement.
THE WIDER CASE
The settlement resolves Vanguard's part of litigation brought by Republican-led state attorneys general against the three largest US passive asset managers — Vanguard, BlackRock, and State Street — alleging that their participation in climate-focused investor coalitions such as Climate Action 100+ and the Net Zero Asset Managers initiative amounted to unlawful co-ordination that artificially constrained investment in the coal and broader fossil fuel industries. Vanguard had already withdrawn from the Net Zero Asset Managers initiative in December 2022.
BlackRock and State Street continue to face active litigation. BlackRock has called the case 'an absurd theory' and State Street has called it 'baseless and without merit'; both continue to contest it.