Antitrust Scrutiny of ESG Initiatives by State Attorneys General Heats Up

In this publication, authors William T. Macenroe, Jon R. Roellke, Amanda B. Robinson & Rachel Mann (Morgan Lewis) look at two significant recent antitrust developments led by red state attorneys general that directly target climate initiatives. The first involves the Texas-led case against three asset managers, where a federal court largely denied motions to dismiss allegations of a conspiracy to reduce coal output through participation in global climate commitments. The second involves Florida’s announcement of an investigation into two climate disclosure organizations for possible violations of state antitrust and consumer protection laws. Together, these cases highlight the growing scrutiny of ESG-driven collaborations and the legal risks for companies aligning with climate-related initiatives.

In Texas v. BlackRock, Judge Jeremy Kernodle held that the states had plausibly alleged violations of both federal and state antitrust laws, rejecting the argument that the “investment only” safe harbor under Section 7 of the Clayton Act shielded the defendants’ conduct. The court distinguished between ordinary asset manager activity—such as proxy voting on governance matters—and actions allegedly designed to reduce competition by coordinating coal output. The opinion emphasized that participation in climate alliances like NZAM and CA100 could raise antitrust concerns if such commitments translated into coordinated reductions in industry output. Although not all signatories were deemed part of the alleged conspiracy, the decision leaves significant uncertainty for companies participating in these initiatives.

Meanwhile, Florida’s attorney general launched an investigation into the Climate Disclosure Project and the Science Based Targets initiative, citing concerns that these organizations may have pressured companies into disclosing proprietary data and paying fees under the pretense of transparency. Beyond the investigation itself, Florida’s expansive Sunshine Act could lead to public disclosure of information shared with the state, raising additional reputational risks for companies that engage with these initiatives. Even firms not directly targeted could face exposure or secondhand scrutiny, underscoring the importance for businesses with climate-related commitments to carefully assess how their strategies are presented and whether participation in collaborative frameworks could invite regulatory challenges.