Attorney General Hilgers Secures Industry-Changing Agreement from Vanguard to Protect the Coal Industry and Empower Investors
LINCOLN – Attorney General Mike Hilgers was part of a 13-State coalition that secured a monumental, first-of-its-kind settlement with The Vanguard Group, Inc. (“Vanguard”), resolving part of the multistate lawsuit against asset managers BlackRock, State Street, and Vanguard. As part of the settlement, Vanguard has agreed to make the strongest passivity commitments in the industry and to empower its investors with proxy voting—a first for the industry. This landmark settlement represents one of the most significant enforcement actions ever taken against coordinated ESG-driven market manipulation, ensures a competitive and low-cost coal industry, and fundamentally resets the precedent for the conduct of large institutional investors.
The lawsuit seeks to lower the cost of coal—and, thereby, electricity prices—throughout the United States by combatting a BlackRock–led cartel that sought to drive up the price of coal under the guise of “green energy.” BlackRock’s efforts produced massive profits for itself and its co-conspirators and raised the prices of electricity for consumers throughout the United States. To further profit on the back of Americans, BlackRock also deceived thousands of its investors who elected to invest in non-ESG funds. The Trump Administration’s Department of Justice (“DOJ”) and Federal Trade Commission (“FTC”) have taken legal action to support the lawsuit by filing a joint statement of interest.
“Vanguard has chosen to do the right thing by empowering its investors to exercise choice in proxy voting. No longer will investors be forced to advance the radical ESG agenda. Vanguard’s innovative approach protects investors and lets them decide how to vote their shares, giving investors the opportunity to prioritize profits over left-wing policies,” said Attorney General Hilgers. “Today’s settlement is especially great news, given the increased demand for energy that the artificial intelligence revolution is bringing. Unleashing American energy means embracing coal as an essential component of powering the future, and I will continue fight unlawful attempts by the woke left to destabilize American energy dominance.”
Under the settlement, 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 a total of $29.5 million to the Plaintiff States.
In addition, Vanguard will offer proxy voting to investors in funds accounting for at least 50 percent of assets invested in U.S. equity funds it advises. This will ensure that Vanguard’s customers can make their voices known on portfolio companies’ business, including whether companies should maximize profitability over ESG or other goals.
Joining Nebraska in the Texas-led lawsuit were attorneys general from Alabama, Arkansas, Indiana, Iowa, Kansas, Louisiana, Missouri, Montana, Oklahoma, West Virginia, and Wyoming.