Can companies still collaborate on sustainability? The legal risks just got real.

Executive Summary: In February 2026, ten state attorneys general sent letters to nearly 80 companies warning that their participation in trade group sustainability initiatives could violate the Sherman Antitrust Act. The target: organizations working collectively to reduce plastic packaging. The message: coordinating on environmental standards through industry groups now carries antitrust scrutiny from state regulators. This affects every company that participates in industry coalitions, sustainability pledges, or sector-wide environmental commitments.

What happened

On February 10, 2026, a coalition of state attorneys general led by Florida's AG sent formal letters of notice to nearly 80 corporations. The companies belonged to three trade organizations working to eliminate what they described as "problematic or unnecessary" plastic packaging.

The attorneys general argued that "the policies, coordinated initiatives, and compliance frameworks these organizations promote and prescribe to their members may constitute unlawful restraints of trade in violation of the Sherman Antitrust Act."

Read that again. They're not alleging price-fixing or market division. They're saying that coordinating on sustainability standards through trade groups might itself be an antitrust violation.

Why this matters beyond plastics

Plastic packaging was the specific target, but the legal theory applies much more broadly. If coordinating through a trade group to reduce packaging waste can trigger antitrust scrutiny, what about industry-wide commitments to cut carbon emissions? Or sector agreements on sustainable sourcing? Collaborative supply chain due diligence frameworks? Joint pledges to phase out certain chemicals?

All of these involve companies in the same industry agreeing to change their behavior in coordinated ways. Under the logic of the Florida AG coalition, any of them could be framed as a "restraint of trade" if they result in companies collectively avoiding certain products, suppliers, or practices.

The antitrust argument, explained

The Sherman Antitrust Act, passed in 1890, prohibits agreements that unreasonably restrain trade. It was designed to break up cartels: groups of competitors agreeing to fix prices, limit production, or divide markets so consumers get worse deals.

The attorneys general are stretching this framework to cover sustainability coordination. Their argument: when companies in the same industry agree through a trade group to stop using certain packaging, they're collectively deciding not to compete on that dimension. That coordination, even though the goal is environmental, restricts the choices available to suppliers and customers.

It's a creative use of a 136-year-old statute. Whether courts agree is another question entirely. But the legal threat is already having an effect.

The chilling effect is the point

You don't need to win an antitrust lawsuit to accomplish what these attorneys general want. You just need to make companies nervous enough to pull back.

That's already happening, and has been for a while. Since 2023, several major companies have quietly left climate coalitions. The Net-Zero Insurance Alliance lost more than half its members. Climate Action 100+ saw big departures from major financial firms. The Glasgow Financial Alliance for Net Zero (GFANZ) weakened its requirements after members worried about antitrust exposure.

The pattern is straightforward: when companies face legal uncertainty about participating in sustainability coalitions, many take the safe route and leave. The attorneys general don't need a courtroom win. The letter itself does the work.

This isn't happening in a vacuum

The antitrust angle is one piece of a broader anti-ESG legal strategy playing out across multiple states. Look at what else happened in February 2026 alone:

A federal court in Texas struck down Texas's anti-ESG law as unconstitutional. The law barred state entities from working with companies that "boycott" fossil fuels. The court found it violated both the First and Fourteenth Amendments.

Separately, a Texas court awarded $4.6 million in attorneys' fees to lawyers who challenged ESG-influenced pension investing at American Airlines, even though the plaintiff proved zero damages. That decision creates a financial incentive for similar lawsuits going forward. Plaintiffs' firms now know they can collect fees even without proving harm.

And the U.S. Supreme Court agreed to hear Suncor Energy v. Boulder County, a climate tort case that could reshape how courts handle corporate liability for climate impacts. The case will likely be argued in fall 2026.

Companies now face pressure from opposite directions: states like California and New York are requiring more climate disclosure and action, while states like Florida and Texas are using legal tools to discourage collective environmental efforts.

What the Sherman Act actually covers

Legal scholars are split on whether the antitrust theory behind these letters holds up. The Sherman Act targets agreements that restrain trade. Sustainability standards that make certain products or practices off-limits could, arguably, be characterized as collective boycotts.

But there's a strong counterargument. The "rule of reason" analysis that courts use for most antitrust claims weighs anti-competitive effects against pro-competitive benefits. Sustainability standards can increase competition by creating new markets, driving efficiency, and responding to what customers actually want to buy.

Trade associations have coordinated on product standards for decades. Safety ratings, quality certifications, technical specifications. These have generally survived antitrust scrutiny when they're open, transparent, and not designed to exclude specific competitors.

The open question is whether sustainability standards get treated like safety standards. The attorneys general are betting courts will draw a distinction. Many legal analysts think that's a losing argument, but litigation could take years to resolve.

How companies are responding

Companies caught between these opposing pressures are adapting in a few ways.

Some are going solo. They set individual sustainability targets instead of joining industry-wide pledges. This reduces antitrust risk but also weakens the collective impact that makes industry commitments effective in the first place.

Others are restructuring their coalitions. Trade groups are revising programs to make sustainability commitments voluntary instead of mandatory, framing them as aspirational goals rather than compliance frameworks. Safer legally, weaker operationally.

A lot of companies are quietly reframing their language. When your CEO talks about "supply chain resilience" instead of "climate action," that's partly a legal strategy. Positioning environmental work as financial risk management rather than collective environmental goals changes how it looks to regulators.

And across the board, corporate sustainability teams that never talked to antitrust lawyers are now coordinating regularly. Any new coalition commitment gets vetted for antitrust exposure before anyone signs.

What this means for your organization

If your company participates in any industry sustainability coalition, trade group environmental initiative, or sector-wide commitment, it's worth evaluating your exposure now. Here's where to start:

• Audit your coalition memberships. List every industry group or alliance your company has joined that involves environmental commitments. Understand what obligations each one carries.

• Involve antitrust counsel. If your legal team hasn't reviewed your sustainability coalition participation for antitrust risk, that review should happen soon. The legal landscape shifted in February.

• Document independent decision-making. When your company changes sourcing, packaging, or environmental practices, the internal record should show that decision was made based on your own business analysis, not because a trade group required it.

• Don't abandon the work. Pulling out of every coalition is an overreaction. Companies that retreat from collective action still face climate disclosure requirements from states like California and New York, plus investor and customer pressure. And they lose the efficiency benefits of industry coordination.

• Watch the courts. The Texas anti-ESG law was just struck down. The Boulder County climate case is headed to the Supreme Court. The antitrust theory behind these AG letters hasn't been tested by a judge. The legal picture could look very different a year from now.

The path forward

Companies can't pick between sustainability and legal safety. They need both. The ones that handle this well will maintain their environmental commitments while structuring their coalition participation to withstand legal challenge.

That means doing sustainability work because it makes business sense for your specific company, not just because an industry group told you to. It means documenting your reasoning. It means getting legal and sustainability teams in the same room instead of working in parallel.

At Council Fire, we work with companies dealing with exactly this kind of regulatory crossfire. The legal environment around corporate sustainability is more complex than it's been in years. But complexity doesn't mean paralysis. It means being more deliberate about how you move.

Related resources

• The Word "ESG" Is Disappearing from Annual Reports. The Work Isn't. — How companies are rebranding sustainability without abandoning it.

• EU CSDDD Rollback: What It Means for Supply Chain Due Diligence — The European side of the sustainability regulation retreat.

• Three Speeds: The UK, EU, and US Are Pulling Sustainability Reporting in Opposite Directions — The global regulatory divergence, mapped.

• Your Sustainability Team Has a Finance Problem — Why internal alignment between legal, finance, and sustainability teams matters now more than ever.

Frequently asked questions

Can participating in a sustainability trade group actually violate antitrust law?

Untested in court. The attorneys general are applying Sherman Act theory to sustainability coordination, arguing that collective environmental commitments amount to restraints of trade. Legal scholars are divided, and no court has ruled on this specific application. The risk is real enough to warrant involving antitrust counsel when evaluating coalition memberships.

Which companies received these AG letters?

Nearly 80 companies associated with three trade organizations focused on reducing plastic packaging. The letters came from a coalition of 10 state attorneys general led by Florida. Not all targeted companies and trade groups have been publicly identified, but the initiative focused on organizations with coordinated packaging sustainability programs.

Should my company leave sustainability coalitions to avoid antitrust risk?

Probably not. The legal theory is aggressive and untested, and leaving all collective action carries its own costs: lost industry intelligence, weaker supply chain coordination, and reputational fallout. A better approach is reviewing your participation with antitrust counsel and making sure your environmental decisions are documented as independent business choices.

How is this different from the anti-ESG laws that states like Texas passed?

Anti-ESG laws punish companies for avoiding fossil fuels. The antitrust approach targets companies for coordinating sustainability action through trade groups. Texas's anti-ESG law was struck down as unconstitutional in February 2026. The antitrust approach uses a different legal framework (Sherman Act vs. state legislation) and hasn't been tested in court yet.