TN AG suing BlackRock in ‘first-of-its-kind’ lawsuit over ESG investments
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NASHVILLE, Tenn. (WKRN) — Tennessee Attorney General Jonathan Skrmetti is going after BlackRock, the world’s largest asset manager, in a first-of-its-kind consumer protection lawsuit over ESG considerations.
In the complaint, Skrmetti accuses BlackRock of making “inconsistent statements” about its investment strategies and misleading Tennessee consumers about the scope of its ESG activity, also known as environmental, social and corporate governance.
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The controversial ESG investment strategy prioritizes climate-related policies such as reducing companies’ carbon output. However, BlackRock and other firms’ push toward ESG-focused investing has drawn increasing backlash from policymakers and the public in recent years.
After BlackRock’s CEO Larry Fink reportedly pulled back from the idea and declared he was discontinuing the use of the term “ESG” in June 2023, Skrmetti alleges that BlackRock has been “deceiving consumers about the company’s extensive commitment to fulfilling ESG aims.”
“Some public statements show a company that focuses exclusively on return on investment, others show a company that gives special consideration to environmental factors,” Skrmetti said in a statement. “Ultimately, I want to make certain that corporations, no matter their size, treat Tennessee consumers fairly and honestly.”
Click here to read the full complaint against BlackRock
According to the lawsuit, BlackRock’s policies and voting records show that ESG considerations have continued to drive portions of its investment strategy as the firm has chosen to maintain ties with ESG coalitions such as the Net Zero Asset Managers Initiative and Climate Action 100+.
Membership in both groups is dependent on companies making specific promises aimed toward fighting climate change. According to Skrmetti, those promises include lobbying, engagement, voting on shareholder proposals, and managing assets with the goal of achieving “net zero” by 2050.
While the firm explains many of its shareholder votes are intended to align companies with “net zero” goals,” Tennessee’s Attorney General claims that BlackRock’s disclosures do not mention such promises.
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The complaint alleges that BlackRock’s “ESG deceptions” have mislead both investors who do not want to invest in assets used to push ESG and investors who are considering investing in ESG as a financial strategy to increase their returns.
As a part of the lawsuit, the state of Tennessee is seeking injunctive relief, civil penalties, and recoupment of the state’s costs.
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