Attorney General Ken Paxton announced Thursday that his office has reached a settlement with investment giant Vanguard, resolving part of Texas’ multistate lawsuit accusing major asset managers of manipulating the coal market through environmental investment strategies.
The agreement marks the first settlement in the case Paxton filed in 2024 against BlackRock, Vanguard, and State Street, in which he alleged the firms conspired to suppress coal production in pursuit of environmental goals—actions he argued drove up electricity costs for consumers.
Under the deal, Vanguard will pay $29.5 million to the participating states and adopt new restrictions on how it uses its shareholder influence. Paxton’s office said Vanguard agreed not to pressure companies to adopt environmental, social, or governance (ESG) policies that could reduce profitability, and pledged not to direct corporate strategy or threaten to divest holdings to force policy changes.
The firm will also expand proxy voting access, allowing investors in funds representing at least half of Vanguard’s U.S. equity assets to vote on shareholder matters—something Paxton called a first for the industry.
“I am glad to see that Vanguard has chosen to protect investors and become the industry leader when it comes to empowering investors with proxy voting choice,” Paxton said in a statement. “Coal is an essential industry to support America’s ever-growing energy demands, and my office will continue to uproot any attempt by investment giants to push a woke agenda that puts American energy at risk.”
Paxton’s office claims the agreement is a landmark enforcement action against what it described as coordinated ESG-driven market manipulation.
The broader lawsuit remains ongoing against BlackRock and State Street, which Paxton accused of continuing to engage in anticompetitive conduct tied to environmental investing strategies. The U.S. Department of Justice and Federal Trade Commission have filed a statement of interest supporting the case.
When the lawsuit was filed in November 2024, Paxton argued the firms had leveraged their holdings in coal companies to push “green energy” policies that artificially constrained supply and raised power costs nationwide. Houston attorney Tony Buzbee was retained as outside counsel in the case.
While Paxton characterized the agreement as a major enforcement victory, Vanguard portrayed the settlement as a pragmatic move to avoid prolonged litigation. “At Vanguard we are focused on helping our more than 50 million investors and their families achieve their financial goals,” the firm said, adding that settling would allow it to “put this distraction behind us” and focus on investment performance.
