Tennessee Attorney General Sues BlackRock Over Conflicting Statements on Investment Returns and Environmental Concerns
In a groundbreaking move, Tennessee Attorney General Jonathan Skrmetti has filed a lawsuit against investment firm BlackRock, accusing the company of making conflicting statements on investment returns and showing “special consideration to environmental concerns.” The lawsuit, which was filed on December 18, alleges that BlackRock’s environmental, social, and governance (ESG) investment strategies violate the state’s consumer protection laws. Skrmetti aims to ensure that corporations, regardless of their size, treat Tennessee consumers fairly and honestly.
BlackRock Faces Lawsuit for Alleged Violation of Tennessee Consumer Protection Laws with ESG Investment Strategies
The lawsuit brought forth by Tennessee Attorney General Jonathan Skrmetti claims that BlackRock’s ESG investing practices constitute “deceptive acts and practices under the Tennessee Consumer Protection Act” and violate the company’s fiduciary duty to its clients. The complaint argues that BlackRock marketed its funds as devoid of ESG considerations, but later admitted to pursuing these aims across all assets under management. Skrmetti alleges that BlackRock misled consumers about the scope and effects of its widespread ESG activity, ultimately depriving customers of the ability to make informed investment choices.
Lawsuit Claims BlackRock Deceived Consumers About the Scope and Effects of its ESG Activity
According to the lawsuit filed by Tennessee Attorney General Jonathan Skrmetti, BlackRock’s inconsistent statements regarding its investment strategies have deprived customers of the ability to make fully informed investment decisions. The complaint alleges that while BlackRock marketed many of its funds as free from ESG considerations, the company committed to pursuing ESG aims across all assets under management. Skrmetti argues that BlackRock’s ESG investing does not provide an indication of current or future performance and fails to represent the potential risk and reward profile of a fund. The lawsuit claims that BlackRock has misled consumers about the scope and effects of its ESG activity.
BlackRock Denies Allegations, Vows to Vigorously Contest Lawsuit Filed by Tennessee Attorney General
In response to the allegations made by Tennessee Attorney General Jonathan Skrmetti, BlackRock has refuted the claims and stated that it will “vigorously contest any accusations that BlackRock violated Tennessee’s consumer protection laws.” The company argues that it fully and accurately discloses its investment practices and approach to proxy voting, contrary to the claims made by Skrmetti. The stage is now set for a courtroom battle between BlackRock, the world’s largest asset-management company, and the Tennessee attorney general.
Divestment Battle Intensifies as Nine States Pull Billions From BlackRock Over ESG Performance Concerns
As the legal battle between BlackRock and the Tennessee attorney general unfolds, a growing number of states have chosen to divest from the investment firm. Nine states, including Florida, Louisiana, Arizona, Texas, Missouri, South Carolina, Arkansas, Utah, and West Virginia, have pulled a total of $4.8 billion from BlackRock. The divestments primarily stem from concerns over the poor performance of ESG investments and the impact on pension funds. While BlackRock’s total assets amount to $1.5 trillion, the divestments highlight the growing dissatisfaction with ESG investing practices and the associated public relations challenges for the company.
The battle between red-state officials and Wall Street investment firms like BlackRock is reaching new heights, with the lawsuit filed by the Tennessee attorney general marking a significant turning point. As ESG investing faces scrutiny and divestments from several states, the outcome of this legal battle could have far-reaching implications for the future of responsible investing and the extent of corporate transparency in the financial sector.
Analyst comment
Negative news for BlackRock as Tennessee Attorney General files lawsuit over conflicting statements on investment returns and environmental concerns. Market may see decreased confidence in BlackRock’s ESG investment strategies. Divestments by nine states further highlight dissatisfaction with ESG practices and pose public relations challenges. Outcome of legal battle could impact future of responsible investing and corporate transparency in financial sector.
