Attorney General Austin Knudsen announced a landmark settlement agreement with The Vanguard Group, Inc. this week, resolving allegations that the asset manager conspired to artificially constrict the coal market through anticompetitive trade practices.
The settlement stems from a 2024 lawsuit filed by Knudsen against Vanguard, BlackRock, and State Street Corporation. The suit alleged the firms used their substantial stockholdings in major publicly traded coal producers to influence company policies, with the effect of reducing coal output and increasing energy prices.
According to the complaint, the asset managers collectively held significant shares in nearly every major publicly held coal company in the United States and used that influence to push companies toward “green energy” production targets. The lawsuit claimed the coordinated effort aimed to reduce coal output by more than half by 2030.
Under the terms of the settlement, Vanguard agreed not to prioritize environmental, social, and governance (ESG) objectives over its fiduciary duty to maximize returns for clients.
“Vanguard came to the correct conclusion in agreeing to this settlement and honoring its fiduciary responsibility to its clients instead of pushing a woke anti-energy agenda,” Knudsen said in a statement. “BlackRock and State Street should follow suit. Coal is a huge part of Montana’s economy and our daily lives as we rely on it to power our homes. As Attorney General, I will continue to do everything in my power to ensure America’s energy dominance and that companies are following the law.”
Settlement Terms
As part of the agreement, Vanguard committed that it will not use its shareholdings to:
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Direct portfolio companies’ business strategies,
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Threaten to withdraw investments to compel companies to act or refrain from acting in certain ways, or
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Nominate directors or shareholder proposals at portfolio companies.
Vanguard also agreed to pay $29.5 million to the participating states. The funds will be placed in escrow pending further action.
In addition, Vanguard will expand proxy voting options to investors in funds representing at least 50% of the assets invested in U.S. equity funds it advises. The provision is designed to allow fund investors greater control over how their shares are voted on corporate matters, including decisions related to ESG policies versus profit maximization.
Broader Coalition
Montana was joined in the lawsuit and settlement agreement by attorneys general from Alabama, Arkansas, Indiana, Iowa, Kansas, Missouri, Nebraska, Texas, and Wyoming.
Litigation against BlackRock and State Street remains ongoing.
The case has drawn national attention as part of a broader debate over ESG investing and the role large asset managers play in shaping corporate strategy, particularly in energy markets. Supporters of the lawsuit argue that coordinated shareholder activism can distort markets and raise consumer energy costs. Critics have previously defended ESG efforts as legitimate risk management and corporate governance practices.
For Montana, where coal remains a significant economic driver and source of electricity generation, the outcome marks a major development in the state’s pushback against what officials describe as coordinated efforts to curtail domestic energy production.
By DNU Staff