The State of Tennessee confirmed that it has filed a consumer protection suit against Blackrock, Inc. In a statement released on Monday, state Attorney General Jonathan Skrmetti accused Blackrock of misleading Tennessee’s citizens about its investment strategies. Specifically, Tennessee has alleged that Blackrock has not been honest about how ESG considerations impact its investment strategies.
The details of the consumer protection suit
According to the consumer protection suit, Blackrock has been offering two conflicting descriptions of its investment strategies. Skrmetti described the conflict between these statements:
“We allege that BlackRock’s inconsistent statements about its investment strategies deprived consumers of the ability to make an informed choice. 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, which is the world’s biggest asset management company, has been a leading proponent of ESG goals. As part of its advocacy, the company has been active in the Climate Action 100+ and Net Zero Asset Managers Initiative. As Tennessee’s press release notes, membership in those groups commits participants to a range of “net zero” goals.
Those goals include lobbying for ESG and managing assets in a way that furthers the 2050 “net zero” objective. The consumer protection suit alleges that Blackrock’s commitment to those goals has been at odds with its promises to consumers:
It should be noted that the firm explains many of its shareholder votes are intended to align companies with the aforementioned “net zero” goals. Yet BlackRock’s disclosures do not mention such promises. In fact, BlackRock has told consumers elsewhere that the only consideration driving its investment decisions is return on investment.
ESG under increasing scrutiny
Tennessee is the first state to file this type of ESG-related consumer protection suit. However, it is but one of several U.S. states to push back against the ESG movement—and companies like Blackrock. States like Kentucky and West Virginia have been taking action to bar Blackrock and others from managing state assets. Those actions have been prompted by accusations that Blackrock and some large banks have tried to boycott lending to traditional energy companies.
