In a statement from Friday, Tennessee Attorney General Jonathan Skrmetti announced that his office came to a settlement with BlackRock, Inc. The State of Tennessee had levied allegations under the Tennessee Consumer Protection Act (TCPA), with the settlement "resolving allegations that the global investment firm misled consumers regarding the role of Environmental, Social, and Governance (ESG) factors in its investment practices."
Not only was BlackRock alleged to have "failed to adequately disclose its integration of ESG considerations into its decision making with respect to asset management," but the suit from Tennessee "further alleges that BlackRock overstated the financial benefits of ESG-related strategies." An email release from Skrmetti's office further pointed out that such practices "allegedly misled investors and consumers regarding BlackRock’s investment objectives and alignments with climate-focused initiatives and other policy-oriented goals."
"This resolution assures that the money Tennesseans invest with BlackRock is managed consistent with the funds’ disclosures,” said Skrmetti in a statement. "While investors are always free to buy cause-oriented products instead of focusing on maximum return, this settlement ensures that only investors who make a knowing choice will see their assets directed toward these non-financial goals."
The release also laid out key terms of the settlement that BlackRock must comply with:
Key Terms of the Settlement:
Enhanced Transparency: BlackRock will increase its disclosure of proxy voting practices, ensuring investors have greater insights into decision-making rationales.
Compliance and Oversight: BlackRock will implement compliance measures, including audits by a third-party service to monitor adherence to the agreement’s terms.
Investor Communications: BlackRock commits to ensuring that its communications with investors are consistent with well-established laws governing disclosure and fiduciary duty.
Commitment to Financial Interests: For funds that do not have investment objectives beyond financial performance, BlackRock commits to casting shareholder votes solely to further the financial interests of investors.
The lawsuit from Tennessee came in December 2023, the first of its kind, as Townhall covered at the time, though the Volunteer State isn't the only one taking issue with BlackRock's practices.
As Townhall also covered last March, the Mississippi issued a cease and desist order against BlackRock. That order alleged that BlackRock, the world's largest asset manager noted for its commitments to advance ESG standards, has been and is making "untrue statements of material fact" as well as "omit[ting] material facts to make its statements not misleading" to Mississippians about its "investment services, especially its involvement in pushing [ESG] factors on portfolio companies." The cease and desist also stated that "many of BlackRock's acts, practices, and courses of business operate or would operate as a fraud or deceit upon investors and potential investors in Mississippi." That same month, BlackRock also came under fire from the Texas State Board of Education.
Will Hild, the executive director of Consumers' Research, has also expressed concern before about how the Biden administration "is littered with former BlackRock employees such as Brian Deese and Eric Van Nostrand who are pushing these liberal, progressive, net-zero, and ESG policies on Americans, rather than focusing on reducing costs at the grocery store and gas pump and tamping down inflation."
BlackRock may not be off the hook if they don't follow through, though. The lawsuit is being dismissed by Tennessee without prejudice, the statement noted, with the state "reserving the right to refile if BlackRock does not substantially comply."
Tennessee beats ESG!
— TN Attorney General (@AGTennessee) January 17, 2025
BlackRock's stringent obligations under this settlement ensure Tennesseans will not see their retirement funds used to support radical ideologies they oppose.
Transparency and accountability guarantee consumers an informed choice.… pic.twitter.com/x49nE5BFFO
Join the conversation as a VIP Member