Alabama Attorney General Steve Marshall announced a $29.5 million settlement with The Vanguard Group Inc., resolving claims that the investment company prioritized environmental goals over investor profits.

The settlement stems from a multistate antitrust lawsuit targeting Vanguard, BlackRock, and State Street for ESG, or Environmental, Social and Governance, initiatives in the coal industry. The states alleged the firms used customer accounts to push ESG goals such as reducing carbon emissions and promoting diversity, driving up coal costs and raising energy prices for Americans.

"Wall Street has no business using working people’s retirement accounts to wage war on American energy," Marshall said. "This settlement sends an unambiguous message that efforts to subordinate investor returns to political objectives will face legal consequences."

Filed in November 2024 and led by Texas, the lawsuit claims the companies engaged in anticompetitive behavior, coordinating to restrict coal supply and harm both investors and U.S. energy companies.

Under the settlement, Vanguard will stop directing portfolio company decisions or threatening to withdraw investments unless companies comply with ESG demands. The firm also will provide proxy voting to investors in funds representing at least 50% of U.S. equity assets it manages, allowing customers to influence corporate priorities, including whether profitability or ESG objectives come first.

Vanguard will pay $29.5 million to the states and the agreement reinforces regulators’ growing scrutiny of ESG investing practices.