Jonathan Skrmetti, the attorney general of Tennessee, is a trailblazer. He has taken a groundbreaking step toward protecting consumers by suing BlackRock Inc., the most significant asset manager in the world.
David has met Goliath.
Plaintiffs in the Tennessee case claim that BlackRock misled existing and future customers by stating the weight of ESG (Environmental, social, and corporate governance ) factors in the firm’s investment decisions. According to the study, which cites a state court case, BlackRock’s climate group participation, shareholder voting record, and pressure on corporations to achieve environmental targets unjustly affect funds that do not consider ESG considerations.
In response to the Attorney General’s allegations, BlackRock has said it would firmly defend itself against any charges that broke consumer protection laws in Tennessee.
This is the most recent blow in the war that Republican state treasurers have been waging against ESG investment, particularly BlackRock. U.S. President Joe Biden, who defended an ESG investment regulation with his first presidential veto, is among the Democratic leaders who have endorsed the strategy. A rising number of Republicans, including several from states that produce energy, are speaking out against ESG.
Because of BlackRock’s contradictory claims and ESG business choices, Tennessee’s lawsuit focuses on BlackRock’s efforts to accomplish climate-related policy objectives via corporate participation and share voting. Joining ESG alliances like Climate Action 100+ and the Net Zero Asset Managers Initiative was essential to BlackRock’s approach.
To be a part of either group, a company like BlackRock must commit to taking action against climate change, which impacts all of its customers’ assets, and meeting specific goals for reducing emissions.
The people of Tennessee have a right to know which of BlackRock’s claims about the company’s decision-making processes is accurate. The State is pursuing injunctive remedies, civil fines, and cost recovery via this enforcement action.