Blog by: Jessica Kurtz

Late last year, Texas along with twelve other states sued three of the country’s largest asset managers: BlackRock, State Street, and Vanguard.[i] Their claim? The asset managers, through their common stock ownership in American coal companies and membership in initiatives aimed at achieving net zero emissions, acted in parallel to restrict coal supply in violation of federal antitrust laws.[ii] The Federal Trade Commission has remained steadfast, administration to administration, in its assertion that there is no safe harbor from the nation’s antitrust laws for sustainability agreements among competitors but had not made a formal statement on the matter in federal court, until now.[iii] In late May, the FTC and Department of Justice’s Antitrust Division stepped into environmental, social, governance (ESG) territory for the first time when they filed a statement of interest in the Texas litigation.[iv]

There are two relevant antitrust laws in this matter: the Sherman Act and the Clayton Act.[v] The Sherman Act broadly declares any contract, agreement, or conspiracy which restrains trade or commerce illegal.[vi] The Clayton Act prohibits any person or company from acquiring stock or using stock in a manner which substantially lessens competition.[vii] Plaintiffs in the Texas-led litigation accuse the asset managers of violating the Sherman Act in two ways: (1) by agreeing to leverage their shares in American coal companies to decrease coal output; and (2) by sharing competitively sensitive information to monitor the coal companies’ compliance with reduction targets.[viii] They accuse asset managers of running afoul of the Clayton Act by acquiring, holding, and using their stock in competing coal companies to substantially lessen competition.[ix] As their clients’ fiduciaries, plaintiffs concede that managers can advocate for investment in one business over another, or even exert pressure on issuers to make a change, even if in practical effect output is reduced.[x] To prevail, antitrust plaintiffs must prove that the asset manager’s action harmed competition which thereby restricted supply.[xi]

In recent years, BlackRock, Vanguard, and State Street have all publicly committed to sustainable investing goals by earmarking significant portions of investment funds to issuers compliant with their ESG expectations, incorporating ESG-related risks into their investment stewardship strategies, and simplifying the process for clients to tailor their investment portfolio to their sustainability goals.[xii] In addition, BlackRock and State Street were at some point members of Climate Action 100+, a coalition of investors dedicated to reducing greenhouse gas emissions.[xiii]

In 2020, BlackRock published two open letters—one directed to clients and another to CEOs—explaining its sustainable investing goals and the importance of collaboration among regulators, investors, and companies.[xiv] In the letter addressed to its clients, BlackRock vowed to expand its investments in companies dedicated to achieving a “low-carbon economy,” join Climate Action 100+ to collaborate with other companies, regulators, and investors on questions of sustainability and “align business strategy with the goals of the Paris Agreement,” and increase transparency with clients through regular disclosure of shareholder votes along with explanations for “high-profile votes.”[xv] Finally, BlackRock vowed to vote against company management personnel who fail to disclose a company plan detailing how the company will comply with the Paris Agreement.[xvi]

In its letter to CEOs, BlackRock’s CEO, Larry Fink, provided insight into BlackRock’s sustainable investing strategies and urged CEOs to act.[xvii] Distinguishing climate change from historical risks institutional investors have navigated, Fink warned that the effects climate change will reap on the economy will be structural and long-term.[xviii] As such, Fink argues that asset managers have a fiduciary duty to mitigate climate-related investment risks the same way they would any other risks.[xix] He urges that a “a significant reallocation of capital” is an inevitability that companies and investors alike should prepare for.[xx]

In honoring their fiduciary duty to insulate clients from risk and avoid antitrust enforcement by federal regulators, asset managers may feel trapped, but there is a way out. The riskiest action the defendants in the Texas litigation took was join Climate Action 100+. It is difficult for a shareholder to dispute the allegation that an action was undertaken to substantially lessen competition in the energy market when they have publicly committed to doing so. The most prudent course of action for asset managers is to develop sustainable investment strategies independently of other firms and abstain from making public disclosures on upcoming shareholder votes. For investment firms unwilling to cease collaborating with other firms on sustainability, they should be careful not to agree to reduce emissions. Commitments to achieve net zero emissions—a goal which can be accomplished without reducing supply—are less likely to run afoul of antitrust laws.

[i] Andre Geverola et al., The FTC and DOJ Weigh In on the Applicability of Antitrust Laws to ESG Initiatives, Arnold & Porter Kaye Scholer LLP (May 29, 2025), https://www.arnoldporter.com/en/perspectives/advisories/2025/05/applicability-of-antitrust-laws-to-esg-initiatives [https://perma.cc/76BZ-ZPRF].

[ii] Id.

[iii] Adam C. Hemlock et al., “I See Roses, You See Thorns”: Antitrust Approaches to ESG Diverge Across the Atlantic, Lexology (Feb. 14, 2025), https://www.lexology.com/library/detail.aspx?g=f31449d1-84f0-4aba-8fb4-cf59a7d16ff6 [https://perma.cc/ABR9-AZAR]; Jeffrey D. Martino et al., United States: FTC and DOJ File Joint Statement of Interest in Texas-Led ESG Asset Manager Lawsuit, Baker & McKenzie (May 28, 2025), https://insightplus.bakermckenzie.com/bm/antitrust-competition_1/united-states-ftc-and-doj-file-joint-statement-of-interest-in-texas-led-esg-asset-manager-lawsuit [https://perma.cc/58ET-3AWJ].

[iv] Martino, supra note 3.

[v] Statement of Interest of the Federal Trade Commission and the United States of America at 1, State of Texas, et al. v. BlackRock, Inc., et al., No. 6:24-cv-00437-JDK (E.D.Tex) [hereinafter Statement of Interest].

[vi] 15 U.S.C. § 1.

[vii] 15 U.S.C. § 18.

[viii] Statement of Interest, supra note 5, at 5.

[ix] Id. at 6.

[x] Id. at 20.

[xi] Id. (citing Nynex Corp. v. Discon, Inc., 525 U.S. 128, 135 (1998)).

[xii] Jasmin Jessen, Top 10: Sustainability Investors, Sustainability Mag. (Sept. 4, 2024), https://sustainabilitymag.com/top10/top-10-sustainability-investors [https://perma.cc/SB6N-UWNU].

[xiii] BlackRock Joins Climate Action 100+ To Ensure Largest Corporate Emitters Act on Climate Crisis, Climate Action 100+ (Jan. 9, 2020), https://www.climateaction100.org/news/blackrock-joins-climate-action-100-to-ensure-largest-corporate-emitters-act-on-climate-crisis/ [https://perma.cc/E24E-TJKX]; About Climate Action 100+, Climate Action 100+, https://www.climateaction100.org/about/ [https://perma.cc/4XFE-4G9J].

[xiv] Sustainability as BlackRock’s New Standard for Investing, BlackRock (Jan. 14, 2020), https://www.blackrock.com/corporate/investor-relations/2020-blackrock-client-letter [https://perma.cc/9R8P-NT9M]; A Fundamental Reshaping of Finance, BlackRock (Jan. 14, 2020), https://www.blackrock.com/corporate/investor-relations/2020-larry-fink-ceo-letter [https://perma.cc/J5DZ-SRPC].

[xv] A Fundamental Reshaping of Finance, supra note 14.

[xvi] Id.

[xvii] Sustainability as BlackRock’s New Standard for Investing, supra note 14.

[xviii] Id.

[xix] Id.

[xx] Id.