The US state of Mississippi has issued a legal warning to BlackRock [BLK:US] over “false and misleading statements to Mississippi investors” related to its environmental, social and, governance (ESG) investment strategies, as reported by Reuters on March 28. Mississippi Secretary of State Michael Watson has issued an administrative “cease and desist order” to BlackRock, seeking a multimillion-dollar administrative penalty on the company. The order pointed out alleged “deceptive statements” made by BlackRock, including claims that ESG factors could bring financial benefits to both the company and its clients while there is no proof for that. Additionally, the order accused Blackrock of misleading investors into believing that the company’s non-ESG funds are managed without consideration of ESG criteria. However, Blackrock, as a member of climate initiatives such as Net Zero Asset Managers (NZAM) and Climate Action 100+ (CA100+), has committed to using all assets under management to achieve climate-related goals.

This is not the first time BlackRock has faced legal action from a Republican-led state of ESG factors. Last December, Tennessee also sued BlackRock for allegedly breaching consumer protection laws by making “misleading” statements about its ESG investment strategy. Before Mississippi’s lawsuit, Florida, Louisiana, and Missouri had announced plans to withdraw investment mandates from BlackRock due to concerns that the company’s ESG efforts may impact investor returns. Earlier this month, the USD53bn Texas Permanent School Fund pulled USD8.5bn from BlackRock, accusing the asset manager of boycotting the fossil fuel energy industry, a pillar of the state’s economy.

Sources:

https://www.reuters.com/sustainability/boards-policy-regulation/blackrock-issued-warning-over-misleading-statements-tied-esg-funds-2024-03-27/

https://www.bloomberg.com/news/articles/2024-03-27/blackrock-issued-legal-warning-over-esg-strategy-by-mississippi

Mississippi Seeks Multimillion Dollar Penalty Against BlackRock Over ESG Investing

https://www.reuters.com/sustainability/sustainable-finance-reporting/texas-schools-fund-pulls-85-billion-blackrock-over-esg-policies-2024-03-19/