Anti-ESG just chalked up its first major win in antitrust litigation. Vanguard, one of three defendants in the ongoing Texas ESG anti-trust case, just agreed to pay the state $29.5 Million to settle the suit. A press release from the Texas AG discusses the details of the settlement:
“Under the first-of-its-kind settlement negotiated by Attorney General Paxton, Vanguard has committed to avoid imposing ESG goals over its customers’ profitability. For example, Vanguard will not use its shareholdings to (a) direct its portfolio companies’ business strategies, (b) threaten its portfolio companies that it will withdraw from its holdings unless they agree to act (or not act) in some manner, or (c) nominate directors or shareholder proposals to its portfolio companies. Vanguard has also agreed to pay $29.5 million to the states.”
Vanguard has a history of folding to Texas. The firm was one of the first to leave the Net Zero Asset Managers in 2023 after caving to pressure from Texas’s ESG investing ban. That same investing ban was found unconstitutional three years later. Similarly, Vanguard may have ultimately prevailed in this litigation, but chose to bow out. Now we’ll see if State Street and BlackRock follow suit. Vanguard’s capitulation will likely embolden the anti-ESG movement, who are increasingly turning to antitrust theories to pressure companies away from ESG. A couple of weeks ago, I wrote that anti-ESG was throwing legal spaghetti at the wall to see what sticks. Well, something has finally stuck, which means we’ll likely see it aggressively replicated.
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