Recent actions by state attorneys general in Texas and Florida highlight rising antitrust scrutiny of environmental, social, and governance (ESG)-aligned investment strategies and climate disclosure groups. Companies with public-facing climate commitments should closely assess how those efforts are framed and shared to mitigate legal risk.
This past week saw two major antitrust developments from red state attorneys general regarding global climate initiatives. First, Judge Jeremy Kernodle of the US District Court for the Eastern District of Texas largely denied motions to dismiss in a case brought by a Texas-led coalition of state attorneys general (AGs) against three asset managers for allegedly conspiring to reduce coal output. Second, the Florida Attorney General announced an investigation into two prominent climate disclosure organizations for potential violations of state antitrust and consumer protection laws.
These developments continue a broader trend of intensified legal and political scrutiny of ESG frameworks and collaborations. In light of these developments, companies with public-facing environmental commitments should closely scrutinize how those priorities are presented and ensure that any messaging accurately reflects a company’s unilateral strategy to address the material risks posed by climate change.
On August 1, 2025, Judge Kernodle issued an opinion in the closely watched Texas v. BlackRock litigation. In this case, Texas and 10 other state attorneys general have accused three asset managers of pressuring coal companies to reduce output as a result of alleged commitments to two climate change initiatives: the Net Zero Asset Managers (NZAM) initiative and Climate Action 100+ (CA100). In largely denying defendants’ motions to dismiss, the court concluded that the states had stated a claim under Section 7 of the Clayton Act and Section 1 of the Sherman Act and certain state laws.
The court’s opinion is significant because of the effect it may have on ordinary investors that hold shares in competing firms and the implications it has for members of climate initiatives. A major point of contention among the parties was whether Section 7’s “investment only” safe harbor would immunize the asset managers for the ordinary activities of institutional investors, such as voting on governance matters. The court reasoned that merely casting proxy votes on governance matters should remain free from Section 7 scrutiny, but in this case, the states had plausibly alleged that the asset managers had substantially lessened competition:
[I]f an institutional investor casts proxy votes, engages with companies, or otherwise uses its stock without substantially lessening competition or attempting to do the same, Section 7’s safe harbor applies. If, however, an institutional investor takes these actions to substantially lessen competition, then, the safe harbor does not apply. The Government makes clear that passive asset managers may still engage in “typical asset manager behavior” such as “conferring with directors and management on best practices for governance structures and oversight processes.” The problem arises when “holders of competing companies . . . discourage competition among their investments in a manner that results in harm to consumers or businesses.” And here, Plaintiffs have alleged much more than an institutional investor merely casting proxy votes to improve corporate governance. Plaintiffs claim that Defendants joined climate initiatives where investors committed their assets to climate-based goals that naturally lead to decreased coal output, made public statements consistent with those goals, and proxy-voted or otherwise engaged with the Coal Companies to achieve those goals. That is not “typical asset manager behavior.”[1]
The court also created significant uncertainty regarding membership in NZAM and CA100. The court opined that both initiatives “did seek commitments from their signatories . . . . While the Court is not suggesting that NZAM or CA100 were themselves the venue of an illegal agreement, neither were they mere ‘trade associations’ as Defendants claim.”[2] Participants may take some solace in that “even Plaintiffs agree that not all signatories were members of the alleged conspiracy.”[3] But the potential scope of the plaintiffs’ theory creates more questions than answers for members of climate initiatives.
On July 28, 2025, Florida Attorney General James Uthmeier separately announced an investigation into two prominent climate disclosure organizations—the Climate Disclosure Project (CDP) and the Science Based Targets initiative (SBTi)—for potential violations of state antitrust and consumer protection laws. Uthmeier’s announcement noted that Florida is scrutinizing whether these organizations “coerc[ed] companies into disclosing proprietary data and paying for access under the guise of environmental transparency.”
The Florida Attorney General’s office is also known for operating under a broad public records regime. Entities that have received civil investigative demands (CIDs) in other matters have seen their submissions disclosed relatively quickly under the state’s Sunshine Act, because Florida’s expansive Sunshine Act may apply to documents and other data produced pursuant to attorney general CIDs. As a result, even companies not directly targeted by this investigation may find their name or data becoming publicly accessible if they’ve shared information with CDP or SBTi.
Many organizations are affiliated with one or both of these initiatives as signatories, data providers, or participants in climate target-setting programs. While Florida’s investigation does not currently target corporate participants, companies may face secondhand scrutiny—particularly if they have entered into agreements or disclosed proprietary data through these frameworks.
CDP highlights that in 2025, more than 640 capital market signatories, which represent more than a quarter of all institutional assets, have “requested thousands of companies to disclose their environmental risks and impacts through CDP, further building on the world’s largest environmental disclosure database.” Given the widespread use of the CDP and SBTi disclosure frameworks, the scope of Florida’s investigation is potentially immense.
Similarly, the implications of the Texas-led lawsuit against asset managers are potentially significant. Companies should promptly review any existing or past relationships with NZAM, CA100, CDP, or SBTi, including contractual terms, disclosures made, and any associated fee structures. In addition, companies are well advised to:
Our team is monitoring these and related ESG developments closely. We stand ready to assist organizations with reviewing their ESG reporting and governance practices in light of this evolving enforcement landscape. If you have any questions, please contact the authors of this LawFlash or your regular Morgan Lewis contact.
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