Investor Climate Action Under Fire: How Fiduciary Duty and Antitrust Are Shaping the Debate
AUTHOR: CARLI SCHOENLEBER
REVIEWERS: MARY REAMES, PAULYNN CUE
SEPTEMBER 3, 2025Highlights
In July 2025, 26 U.S. state financial officers urged asset managers like BlackRock to limit environmental, social, and governance (ESG) and climate considerations in investment strategies, calling for a return to “traditional fiduciary duty.”
Mounting evidence shows that climate change carries significant financial implications (e.g., rising insurance costs). Institutional investors have been integrating these risks into their understanding of fiduciary duty since the early 2000s.
Antitrust lawsuits targeting coalitions like the Net Zero Asset Managers (NZAM) initiative and Climate Action 100+ reflect politically motivated efforts to discourage investors from addressing climate change.
Legal scholars emphasize that fiduciary duty is evolving to encompass climate risks, but investor action alone is not enough. Climate change remains a market failure, and strong public policy is essential to correct incentives and drive decarbonization at scale.
Introduction
Investor-led climate action in the U.S. is under increasing political and legal scrutiny. This article examines two key fronts in that debate — efforts to narrow the definition of fiduciary duty to exclude climate risk, and lawsuits alleging that investor climate coalitions violate antitrust law. In this article, we explore how these challenges intersect, what legal experts say, and why understanding this shifting landscape is critical for companies and investors seeking to integrate climate considerations into their strategies.
Does Fiduciary Duty Include Climate Risk?
On July 29, financial officers from 26 U.S. states sent a letter to large asset managers like BlackRock, urging them to avoid using proxy voting on what they called “speculative predictions” about climate change, exclude net-zero mandates from default investment strategies, and maintain a “singular focus on shareholder value” — calling for a return to what they describe as “traditional fiduciary duty.”[1]
This stance ignores decades of scientific evidence that climate change impacts are accelerating and already imposing real, measurable financial damages — from rising insurance costs and property devaluation to escalating repair bills, compliance costs, and shifts in tenant demand. [2] If investors don't account for these realities, they risk mispricing assets, overlooking mounting liabilities, and ultimately jeopardizing both long-term returns and the retirement savings, pensions, and livelihoods that depend on them.
Far from a new or speculative concern, investors and legal experts have long treated climate change and other sustainability factors as financial risks within the scope of fiduciary duty. Key milestones include:
United Nations (UN) Global Compact; Who Cares Wins (2004): First major articulation from institutional investors that ESG factors, particularly climate change, are tied to long-term financial performance and should be considered as part of investors’ fiduciary duty. [3]
Principles for Responsible Investment (PRI), UN Environment Programme Finance Initiative, and UN Global Compact; Fiduciary Duty in the 21st Century (2015): Expanded and legitimized this view, stating that ignoring financially material ESG factors constitutes a “failure of fiduciary duty.”[4]
Columbia Law School Sabin Center for Climate Change Law; Varied Legal Parameters Shape Fiduciaries’ Ability to Act on Climate Risk (2025): Emphasized that fiduciary duty has no single, fixed definition. Different legal frameworks (e.g., corporate law, ERISA, registered investment advisers) treat climate considerations differently. As markets and risks change, definitions also evolve, with the increasing financial impacts of climate risk contributing to this shift.[5]
This growing body of work illustrates a widening market consensus: climate risk is a material financial risk that fiduciaries increasingly have a duty to address. That consensus is gaining legal traction, strengthening the foundation for investor action. As Hanawalt and Fitch from Columbia Law School write, “the more policymakers, regulators, and perhaps especially courts routinely identify this connection [between climate risk and financial risk], the harder it will be for opponents to characterize fiduciaries’ climate-minded considerations as political theater rather than as economic necessity.”[5]
We’ve already seen this shift in practice — from U.S. bank regulators establishing a high-level framework for the safe and sound management of climate-related financial risks (2023),[6] to the U.S. Securities and Exchange Commission adopting climate disclosure rules (2024),[7] to state laws like California’s SB 261 requiring companies to report on climate-related financial risks (2023) (among many developments internationally).[8] Each of these actions marked progress in legitimizing climate risk as financial risk, yet in the current political environment, all are now facing active efforts to pause, weaken, or repeal them.[9] [10] [11]
One of the most aggressive counterstrategies has emerged in the form of antitrust lawsuits against investor climate coalitions — an effort to reframe coordinated climate action not as prudent financial risk management, but as illegitimate, anti-competitive behavior.
Investor Climate Coalitions Face Rising Antitrust Challenges
For the last few years, conservative lawmakers have intensified scrutiny of investor climate coalitions such as the NZAM initiative and Climate Action 100+, leading to lawsuits and a wave of asset managers exiting these coalitions. This push began with the House Judiciary Committee’s investigation (launched in December 2022) into whether coordinated investor engagement on climate violates antitrust law, which we reported on last February.
Among the most visible legal challenges is the Texas-led, multi-state lawsuit against BlackRock, Vanguard, and State Street, filed in December 2024 and now moving forward after a federal judge rejected the asset managers’ motion to dismiss the case. The states allege that the asset managers used coalitions like NZAM and Climate Action 100+ to pressure coal companies into cutting production in ways that violate antitrust law. State Street called the claims “baseless and without merit” and said the lawsuit “poses unnecessary risk to investors and energy markets.”[12]
The Federal Trade Commission and U.S. Department of Justice have filed a joint Statement of Interest siding with the states, arguing that investors can face antitrust liability under the Clayton Act for using “stock holdings in multiple competitors to achieve anticompetitive goals.”[13]
Are Climate Coalitions Anti-Competitive or Pro-Competitive?
Critics often argue that coordinated investor action on climate violates antitrust laws. However, legal experts largely disagree, noting that current antitrust frameworks not only allow for such coalitions, but may even view them as pro-competitive:
Cleary Gottlieb Steen & Hamilton LLP (2025): “US antitrust law as it stands (as is the case under EU and UK competition law) leaves room... to allow shareholder cooperation to mitigate the market failures that lead to climate change, nature loss, and large-scale pollution.”[14]
Westlaw (2025): “These initiatives are not antitrust ‘cartels’ (at least as alleged). Quite the opposite — these initiatives encourage competition with cleaner, more innovative, or more transparent products. That is procompetitive under the antitrust laws.”[15]
Columbia Center on Sustainable Investment & Columbia Law School Sabin Center for Climate Change Law (2023): “In the case of financial institution coalitions, standards-setting efforts — which are often protected and encouraged under antitrust law — are not akin to a boycott or an effort to starve an industry of capital. Industries often move away from one input and toward another.... As an example, pledges and cohorts to invest in artificial intelligence (AI) are not an effort to starve older technologies of capital; they are simply the recognition of shifting market dynamics.”[16]
It is also important to note that U.S. coal production had already been in multi-decade decline before these coalitions formed — driven by rising mining costs, environmental regulations, and competition from natural gas and renewables.[17] This context not only undercuts the idea that climate alliances alone are responsible for falling coal production but also shows that the economics of fossil fuels are becoming less favorable over time, while renewables continue to become more affordable.[18] That trajectory lends credibility to investor climate strategies as financially sound, market-aligned decisions, not just values-driven ones.
The Limits of Fiduciary Duty in Addressing Climate Change
Still, even if courts reject attempts to weaponize antitrust law against climate coalitions, and even if fiduciary duty continues to evolve in ways that clearly encompass climate risk, those legal victories can only go so far. They can strengthen investors’ justification for investing in low-carbon assets, but they don’t necessarily guarantee emissions reductions in the real economy.
Gosling and MacNeil (2023) note that courts are unlikely to view climate risk integration as at odds with fiduciary duty but caution that many investor net-zero strategies function primarily as "progressive divestment from higher emitting assets.” They highlight that while there’s been a decline in the carbon intensity of institutional portfolios, global emissions continue to rise, indicating that high-emitting assets are often transferred to private or state-owned hands rather than being decarbonized.[19]
The Columbia Center on Sustainable Investment (2024) reaches a similar conclusion: fiduciary duty already permits investors to act on financially material climate risks, but systemic challenges like climate change require government intervention through laws, taxes, and incentives. As they put it, “putting too much emphasis on the role of institutional investors may be a distraction from public policy.”[20]
Together, these perspectives underscore that while fiduciary duty is foundational to investor climate action, it is not sufficient to achieve the real-world emissions reductions needed to avoid the most severe impacts of climate change. Climate change ultimately represents a market failure: the economic damages of emissions, from property losses to public health costs, are still externalized to society instead of fully embedded in the cost of fossil fuels. As emissions continue to rise, it is evident that markets alone are not delivering the energy transition at the speed required. Stronger public policy — spanning carbon pricing, regulation of emissions, and clean energy investment — is essential to shift the global economy away from fossil fuels.[21]
Conclusion
In today’s shifting political environment, the scope of fiduciary duty and the legitimacy of investor climate coalitions are under more scrutiny than ever. “Traditional fiduciary duty” must evolve beyond its original, pre-climate change context to reflect the rising financial impacts of a warming world, and participation in well-founded climate coalitions may be one way investors meet that obligation.
As politically motivated antitrust challenges gain traction, investors and businesses will need to frame climate efforts not only as legally sound but as prudent, evidence-based financial decision-making, which will serve to build broader confidence among courts, regulators, and the public that climate action is grounded in economic necessity rather than ideology.
At the same time, fiduciary duty alone cannot resolve the market failure of climate change. Meeting global emissions targets will ultimately require stronger public policy, with investor action serving as a vital complement.
Author and Reviewers
CARLI SCHOENLEBER
SENIOR COMMUNICATIONS MANAGER, CONTENT AND ENGAGEMENT SPECIALISTCarli is a Senior Communications Manager at Verdani Partners, where she leads thought leadership, chairs the Engagement Committee, and serves as primary author for Verdani's nonprofit, the Verdani Institute for the Built Environment. With over a decade of experience in the sustainability field, she bridges research and communications to translate complex issues into persuasive messaging and actionable strategies that drive business value and positive impact. Carli holds a B.S. in Environmental Science, Policy, and Management from the University of Minnesota and an M.S. in Forest Ecosystems and Society from Oregon State University.
MARY REAMES
SENIOR DIRECTOR OF COMMUNICATIONSMary is the Senior Director of Communications for Verdani Partners, drafting high-quality ESG communications and educational materials for Verdani’s national and international client portfolios. Mary has a long history in the ESG industry, having worked as an environmental attorney for the City of Chicago and as a sustainability consultant and LEED-EB contracted reviewer. She holds a BA in Sociology/ Anthropology, a BS in Sustainable Business Management, and a JD with a concentration in Environmental Law.
PAULYNN CUE
CHIEF COMMUNICATIONS & BUSINESS OFFICERPaulynn is the Chief Communications Officer for Verdani Partners, bringing over 20 years of experience in sustainability and ESG, business development, communications, design, and regenerative development. She has been instrumental in shaping Verdani’s programs since 2014. Paulynn studied architecture at Carnegie Mellon University, advertising at New York University, and environmental design at Parson’s School of Design, and has worked with leading organizations such as Gensler, World Building Institute, and the Intergovernmental Renewable Energy Organization Sustainable Development Commission.
References
[1] U.S. State Financial Officers. (2025, July 29). Letter from 26 U.S. state financial officers to major asset managers regarding fiduciary duty, ESG, and climate change. https://treasurer.utah.gov/wp-content/uploads/07-29-2025-Letter-from-26-State-Financial-Officers-to-Asset-Managers-Regarding-Fiduciary-Duty.pdf
[2] United Nations Environment Programme Finance Initiative. (2023, March). Climate risks in the real estate sector. https://www.unepfi.org/wordpress/wp-content/uploads/2023/03/Real-Estate-Sector-Risks-Briefing.pdf
[3] United Nations Global Compact. (2004). Who cares wins: Connecting financial markets to a changing world. https://documents1.worldbank.org/curated/en/280911488968799581/pdf/113237-WP-WhoCaresWins-2004.pdf
[4] United Nations Environment Programme Finance Initiative & Principles for Responsible Investment. (2015, September). Fiduciary duty in the 21st century: Global statement on investor obligations and duties. https://www.unpri.org/download?ac=1396&utm
[5] Hanawalt, C. & Fitch, A. (2025, July). Varied legal parameters shape fiduciaries’ ability to act on climate risk. Columbia Law School Sabin Center for Climate Change Law. https://scholarship.law.columbia.edu/cgi/viewcontent.cgi?article=1255&context=sabin_climate_change
[6] Board of Governors of the Federal Reserve System. (2023, October 24). Agencies issue principles for climate-related financial risk management for large financial institutions. https://www.federalreserve.gov/newsevents/pressreleases/bcreg20231024b.htm?
[7] U.S. Securities and Exchange Commission. (2024, March 6). SEC adopts rules to enhance and standardize climate-related disclosures for investors. https://www.sec.gov/newsroom/press-releases/2024-31
[8] California Legislature. (2023, October 9). Senate Bill No. 261: Greenhouse gases: Climate‑related financial risk (2023–2024 Reg. Sess.). Approved October 7, 2023, Chapter 383. https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240SB261
[9] Office of the Comptroller of Currency. (2025, March 31). OCC withdraws principles for climate-related financial risk management for large financial institutions. https://www.occ.gov/news-issuances/news-releases/2025/nr-occ-2025-27.html
[10] U.S. Securities and Exchange Commission. (2025, March 27). SEC votes to end defense of climate disclosure rules. https://www.sec.gov/newsroom/press-releases/2025-58
[11] Johnson, L. (2025, August 20). California’s climate disclosure laws survive preliminary injunction request. ESG Dive. https://www.esgdive.com/news/californias-climate-disclosure-laws-survive-preliminary-injunction-request-sb253-sb261/758174/
[12] Johnson, L. (2025, August 11). BlackRock, Vanguard, and State Street bid to dismiss coal antitrust case fails. ESG Dive. https://www.esgdive.com/news/blackrock-vanguard-state-street-motion-to-dismiss-coal-antitrust-case-denied-texas-ag/757336/
[13] Federal Trade Commission. (2025, May 22). FTC and DOJ file statement of interest in energy collusion case against BlackRock, State Street, and Vanguard. https://www.ftc.gov/news-events/news/press-releases/2025/05/ftc-doj-file-statement-interest-energy-collusion-case-against-blackrock-state-street-vanguard
[14] Dolmans, M., Lin, W., & Lee, C.E. (2025, January 3). Sustainable antitrust policy in the US and Texas v BlackRock — Hot water or hot air? Cleary Gottlieb Steen & Hamilton LLP. https://www.ftc.gov/news-events/news/press-releases/2025/05/ftc-doj-file-statement-interest-energy-collusion-case-against-blackrock-state-street-vanguard
[15] Kloub, J. et al. (2025, February 7). Weaponizing antitrust: An unsubstantiated attack against climate initiatives. Westlaw Today. https://www.wsgr.com/a/web/jY18gBkNaokPxUM1vGhDCb/westlaw-today_weaponizing-antitrust-article.pdf
[16] Hearn, D., Hanawalt, C., & Sachs, L. (2023, July). Antitrust and sustainability: A landscape analysis. Columbia Law School Sabin Center for Climate Change Law. https://ccsi.columbia.edu/sites/ccsi.columbia.edu/files/content/docs/Antitrust-Sustainability-Landscape-Analysis.pdf[
[17] U.S. Energy Information Administration. (2025, April 8). U.S. production of all types of coal has declined over the past two decades. https://www.eia.gov/todayinenergy/detail.php?id=64924
[18] Bloomberg NEF. (2025, February 6). Global cost of renewables continue falling in 2025 as China extends manufacturing lead. https://about.bnef.com/insights/clean-energy/global-cost-of-renewables-to-continue-falling-in-2025-as-china-extends-manufacturing-lead-bloombergnef/
[19] Gosling, T. & MacNeil, I. (2023, February 22). Can investors save the planet? NZAMI and fiduciary duty. Capital Markets Law Journal, 18 (2), 172-193. https://doi.org/10.1093/cmlj/kmad002
[20] Stewart, F. & Walkate, H. (2024). In the line of duty? Institutional investors’ responsibilities regarding systemic risks. Columbia Center on Sustainable Investment. https://ccsi.columbia.edu/sites/ccsi.columbia.edu/files/content/docs/publications/ccsi-institional-investors-responsibilities-systemic-risks-fiduciary-duty-report.pdf
[21] Stern, N. (2021, October 26). 15 years on from the Stern Review: The economics of climate change, innovation, and growth. London School of Economics and Political Science. https://www.lse.ac.uk/granthaminstitute/wp-content/uploads/2021/10/Stern_Review_15th_anniversary26_Oct_2021.pdf
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