The state of Tennessee has sued investment giant BlackRock, Inc. over a longtime thorn in the Republican-led legislature’s side – the New York-based firm’s support for non-financial strategies favored by Democrats.
The civil enforcement claim, filed Monday in the Circuit Court of Williamson County in Tennessee’s Twenty-First Judicial District, seeks to curb BlackRock’s strong influence in implementing and promoting Environmental, Social and Corporate Governance (ESG) policies, and recoup shareholder revenue allegedly lost to those investments.
Tennessee State Attorney General Jonathan Skrmetti argues that BlackRock’s climate-based policies deceived and harmed investors, including notable clients in Williamson County.
“We allege that BlackRock’s inconsistent statements about its investment strategies deprived consumers of the ability to make an informed choice,” Skrmetti said, in a written statement. “Some public statements show a company that focuses exclusively on return on investment, others show a company that gives special consideration to environmental factors. Ultimately, I want to make certain that corporations, no matter their size, treat Tennessee consumers fairly and honestly.”
BlackRock manages $8.6 trillion in assets worldwide and describes its ESG commitments as part of a “sustainable investment” strategy that benefits shareholders by improving the environment and increasing the firm’s social value.
The company issued a statement denying Skrmetti’s claims and promising to “vigorously contest any accusations that BlackRock violated Tennessee’s consumer-protection laws.”
In June, BlackRock CEO Larry Fink was widely quoted in the media saying he would no longer discuss or promote ESG policies because they are politicized, following a shareholder revolt over the matter. The company reportedly lost $4 billion in managed assets because of disputes with its ESG policies.
“The State brings this civil enforcement action to protect the public and preserve the integrity of the commercial marketplace in Tennessee in the face of BlackRock’s practice of ESG evasion,” Skrmetti’s complaint states. “The State’s enforcement action seeks injunctive relief, civil penalties, disgorgement, restitution for consumers, and recoupment of the State’s costs.”
BlackRock manages hundreds of thousands of clients that range from central banks, public pensions and government agencies.
Skrmetti argues that BlackRock continues to market its commitment to ESG goals while doing little to back up those claims.
“BlackRock has engaged in a series of unlawful ESG-related misrepresentations and omissions in connection with the marketing or sale of its investment products and services to Tennessee consumers,” states the court complaint. “Rather than risk either downside, BlackRock has chosen a third way: deceiving consumers about the company’s extensive commitment to fulfilling ESG aims.”
Sandy Mazza can be reached via email at [email protected], by calling 615-726-5962, or on Twitter @SandyMazza.
