See You in Court: Texas-led Case Against Asset Managers Advances

August 6, 2025

By Jack Grogan-Fenn

A trio of asset managers are set to face a Texas-led antitrust lawsuit from Republican states after a US judge declined to dismiss the vast majority of the counts in the case.

As a result of the ruling from the Donald Trump-appointed judge, the 13 states can move forward with their claims that the ‘big three’ asset managers – namely BlackRock, State Street and Vanguard – had violated US antitrust law.

The lawsuit alleges that by engaging in climate activism by joining investor initiatives like the Climate Action 100+ (CA100+) and using shareholder advocacy to impact coal production and energy prices the asset managers had fallen foul of the country’s antitrust rules.

US District Judge Jeremy Kernodle, who was appointed to the position by Trump in 2018 during his first term as US President, reportedly dismissed only three of the 21 counts in the lawsuit filed by the 13 Republican states.

As reported by Minerva Analytics, a coalition of 11 US states filed a lawsuit against BlackRock, State Street and Vanguard, accusing them of using their shares in major oil companies to restrict the coal market and harm customers. Two further states have since joined the lawsuit.

“BlackRock, State Street, and Vanguard — three of the most powerful financial corporations in the world — created an investment cartel to illegally control national energy markets and squeeze more money out of hardworking Americans,” said Ken Paxton, Attorney General of Texas, in a statement. “Today’s victory represents a major step in holding them accountable. I will continue fighting to protect Texas and defend America’s energy independence from this unlawful conspiracy.”

The statement also alleged a “conspiracy” by the asset manager trio had “violated multiple state and federal laws forbidding anticompetitive schemes and deceptive trade practices”.

The ‘big three’ asset managers have significantly scaled back their voting on ESG shareholder proposals, with the shifting politics surrounding sustainable investing playing a key role.

A report from NGO ShareAction released in May graded the responsible investment practice standards of 76 asset managers, finding that responsible investment progress had “slowed significantly” since 2022, as reported by Minerva Analytics. BlackRock, State Street and Vanguard all received an E grade and were among the worst performing asset managers, placing 53, 61 and 68 respectively in the rankings.

None of BlackRock, State Street or Vanguard are currently members of CA100+. BlackRock transferred its membership to subsidiary BlackRock International in July 2024, State Street quit the alliance in early 2024, while Vanguard has never been a member.

All three asset managers were also previously members of the Net Zero Asset Managers initiative (NZAM) at different stages, but BlackRock’s January departure was a key factor behind its indefinite suspension, as reported by Minerva Analytics.

Alongside Texas, Alabama, Arkansas, Indiana, Iowa, Kansas, Missouri, Montana, Nebraska, Louisiana, Oklahoma, West Virginia and Wyoming were the other states that co-filed the lawsuit. Kernoodle dismissed claims that the asset managers had violated Louisiana and Nebraska consumer protection laws, but cases of breaches in the other states will be permitted to proceed.

Nine of the states involved in the lawsuit against the ‘big three’ asset managers were among those whose state officials sent a letter last week requesting that several major asset managers scale their ESG-related investment activities to continue business between the two parties.

As reported by Minerva Analytics, the letter signed by 26 finance officials from 21 Republican-run US states was sent to 18 asset managers, including BlackRock, State Street and Vanguard. It outlined “deep concern” over the “erosion of traditional fiduciary duty” in American capital markets, setting a September 1 deadline for the asset managers to respond to the letter.

The letter detailed five steps for asset managers looking to do business with the 21 states to undertake. This included disclosing all affiliations and collaborative initiatives – such as CA100+, the Glasgow Financial Alliance for Net Zero (GFANZ) and the Principles for Responsible Investment – that “could influence investment strategy or engagement priorities”.

Republicans have previously launched other attacks on CA100+. Last year, the Republican heads of the US Judiciary Committee sent letters to over 130 companies demanding information on their CA100+ membership, as reported by Minerva Analytics. The letters described CA100+ as a “woke ESG cartel” and alleged that involvement in the group could potentially violate US antitrust laws.

In December, a report from the Republican-led House of Representatives Judiciary Committee branded the big three asset managers, “blue-state” public pensions and organisations including CA100+, GFANZ and NZAM as being a “climate cartel”.

Republican members of the House of Representatives had also previously written to the founders of CA100+ claiming that the organisation’s role in co-ordinating how some companies pursue ESG policies may violate antitrust laws.

Since the re-election of Trump, Texas lawmakers have heightened attacks on ESG-related investing principles. In addition to actions against asset managers, the state has taken aim at proxy advisors.

Regulation requiring deeper disclosures on voting recommendations from proxy advisors is on track to come into effect on September 1, as reported by Minerva Analytics. Senate Bill (SB) 2337 would require proxy advisors that “deviate” from acting in the “financial interest” of shareholders to “clearly disclose that fact”. This includes advisors recommending votes based on ESG investing, DEI factors and social credit or sustainability scores.

However, Minerva Analytics reported that proxy advisors have pushed back and are suing Texas, with cases from two separate proxy advisors reportedly arguing that the law was unconstitutional and eroding their First Amendment right to advise clients.

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