The state of Tennessee has filed a lawsuit against BlackRock, alleging that the world’s largest asset manager violated consumer protection laws by providing misleading information about its environmental, social, and corporate governance (ESG) investment strategies, as reported by Reuters on December 18. Tennessee contends that BlackRock downplayed the significance of ESG considerations in shaping the firm’s investment strategies and their impact on the financial performance and outlook of companies. BlackRock has refuted these claims, asserting that it accurately discloses its investment practices and proxy voting approach, according to a statement emailed to Reuters. This legal action comes as part of a broader inquiry initiated by Tennessee Attorney General Jonathan Skrmetti, who had previously demanded information from ten major asset managers about their efforts to address climate change.

Earlier in the year, Skrmetti, along with 20 other Republican state attorneys general, sent letters to asset managers suggesting potential breaches of fiduciary duties regarding their handling of environmental and social issues. The lawsuit reflects the ongoing debate around ESG considerations in investment decisions, with companies and investors increasingly weighing factors such as climate change and workforce diversity. While Democratic leaders, including President Joe Biden, have endorsed this approach, Republicans, particularly those from energy-producing states, have raised objections and joined a growing chorus challenging the relevance and impact of ESG criteria in investment strategies.

Sources:

https://www.reuters.com/legal/tennessee-sues-blackrock-citing-misleading-esg-strategy-bloomberg-news-2023-12-18/