Alabama Attorney General Steve Marshall announced Monday a $29.5 million settlement with The Vanguard Group Inc. as part of a multistate antitrust lawsuit targeting Wall Street asset managers over their use of environmental, social, and governance investing principles in the coal industry.

ESG, or Environmental, Social and Governance investing, refers to a set of principles that some asset managers have used to factor environmental and social considerations into investment decisions alongside traditional financial metrics.

“Wall Street has no business using working people’s retirement accounts to wage war on American energy,” Marshall said.

“When you hand your retirement to an investment firm, you’re trusting them with your family’s future, not handing them a political blank check. This settlement sends an unambiguous message that coordinated efforts to subordinate investor returns to political objectives will face legal consequences.”

The settlement resolves claims against Vanguard in a Texas-led lawsuit first filed in November 2024. Alabama and partner states alleged that Vanguard, along with co-defendants BlackRock and State Street, used customer accounts to advance environmental goals in ways that restricted coal supply, drove up energy prices, and subordinated investor returns to political objectives.

A federal district court denied motions to dismiss the case last year, allowing it to proceed.

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Under the settlement, Vanguard has agreed to stop using its shareholdings to direct portfolio companies’ business strategies, threaten to withdraw holdings to pressure companies into specific actions, or nominate directors or shareholder proposals at portfolio companies. Vanguard will also offer proxy voting to investors in funds accounting for at least 50 percent of assets invested in U.S. equity funds it advises, giving individual investors a direct voice in how their shares are voted.

Marshall said the fight is not over, with BlackRock and State Street still named as defendants in the ongoing lawsuit.

“Today, I’m glad that Vanguard has agreed to refocus on financial performance, not politics, but we still have work to do in our action against BlackRock and State Street,” Marshall said.

Sawyer Knowles is a capitol reporter for Yellowhammer News. You may contact him at [email protected].