Tennessee’s Attorney General, Jonathan Skrmetti, has initiated legal action against BlackRock, the world’s largest asset manager, accusing the firm of misleading consumers about its engagement in left-wing social and environmental initiatives. The lawsuit, filed on Monday, focuses on BlackRock’s Environmental, Social, and Governance (ESG) strategies, alleging that the firm’s unclear communication deprived consumers of the ability to make informed decisions regarding the company’s true objectives.
Skrmetti’s lawsuit is part of a broader movement among Republican-led states, many of which have withdrawn investments from BlackRock due to concerns over the firm’s emphasis on ESG goals. Earlier this year, Skrmetti joined a group of 20 state Attorneys General in cautioning BlackRock and other asset managers about potential conflicts between their fiduciary duties and political agendas.
The lawsuit argues that BlackRock has been misleading consumers about the extent and impact of its ESG activities. It cites an interview with BlackRock CEO Larry Fink, in which he claimed that all of the company’s actions, including those related to ESG, are driven by the pursuit of financial returns, emphasizing their fiduciary responsibility.
However, the suit points out contradictions in Fink’s assurances, highlighting BlackRock’s involvement in environmentally-focused coalitions like the Net Zero Asset Managers Initiative and Climate Action 100+. Membership in these groups, the lawsuit contends, requires commitment to aggressive carbon-reduction strategies across all assets under management. This commitment, according to the lawsuit, contradicts BlackRock’s public statements and potentially deceives consumers about the company’s dedication to fulfilling ESG objectives.
Furthermore, the lawsuit alleges that BlackRock has falsely represented that some of its funds do not incorporate ESG considerations. Despite claims that its non-ESG funds do not follow a sustainable, impact, or ESG investment strategy, BlackRock’s membership in the Net Zero Asset Managers Initiative implies a commitment to achieving net zero emissions across all assets under management by 2050.
The Tennessee Attorney General’s Office is seeking injunctive relief, civil penalties, and the recoupment of the state’s costs, emphasizing that Tennessee consumers deserve transparency regarding BlackRock’s decision-making processes. The lawsuit underscores the growing scrutiny of asset managers’ ESG commitments and the need for clarity in how these strategies are communicated to investors.