BlackRock was sued on Monday by the US state Tennessee. The lawsuit accused the $9.1 trillion New York-based asset management firm of violating consumer laws by ignoring environmental, social, and governance factors when developing its investment strategy.
The suit filed by Tennessee Attorney-General Jonathan Skrmetti in state court alleged that BlackRock was inconsistent in its statements about whether it focused solely on investment returns, or if it prioritized ESG considerations.
“For Years. . . BlackRock misled consumers regarding the extent and effects of their widespread ESG activities,” said the complaint. The complaint claims that BlackRock “has downplayed how ESG factors drive their investment strategies, including non-ESG funds”, and “overstated” the impact of ESG factors on companies’ financial performance.
This is part of a larger campaign by Republican state financial officials against ESG investments in general and BlackRock in particular. This follows BlackRock’s refusing support for ESG-focused shareholders proposals, and Larry Fink’s decision not to use the term “ESG”, on the basis that it has been “weaponized” by both conservatives and liberals.
Skrmetti said, “I want to ensure that all corporations, regardless of their size, are treating Tennessee consumers honestly and fairly.” Fox Business was the first to report on the civil suit.
BlackRock issued a statement saying that it “rejects the Attorney-General’s claims” and would vigorously contest any allegations that BlackRock had violated Tennessee consumer protection laws. Contrary to the Attorney-General’s claims BlackRock discloses its investment practices and proxy voting approach fully and accurately.
Texas, Florida and South Carolina, as well as other Republican-led states, have divested assets from BlackRock after concluding its ESG criteria amounted to a fossil fuel boycott.
BlackRock has repeatedly denied this claim. It is one of more than 300 asset management firms that have signed up to the Net Zero Asset Managers Initiative. BlackRock announced that it had invested over $100bn in Texas energy companies including ExxonMobil, by the end of 2022 after being placed on a boycott list for fossil fuel companies.
BlackRock has also been under pressure from the left. The New York City comptroller Brad Lander accused it of succumbing to a pressure campaign against ESGs that he called “misinformed” and “shortsighted”.
Tennessee’s lawsuit stated that the firm had “appears” to have settled on telling both parties what they wanted to listen to, in order to keep their business.