The long-standing movement to compel corporations to pursue climate and social-justice goals faced a significant setback with the Feb. 26 settlement by Vanguard, the world’s second-largest asset manager, of a lawsuit by 11 state attorneys general that alleged illegal collusion against the coal industry.
Since its origins within the United Nations in 2004, the environmental, social, and governance (ESG) industry has risen to become a powerful tool to influence corporate behavior, often with the support of institutional asset managers that were dominant shareholders in many, if not most, S&P 500 companies. The lawsuit being brought by conservative state attorneys general charged the “Big Three” asset managers—BlackRock, Vanguard, and State Street—with “conspiring to artificially constrict the market for coal through anticompetitive trade practices,” according to a statement from the office of Texas Attorney General Ken Paxton, who led the effort.
