Republican Tennessee Attorney General (AG) Jonathan Skrmetti filed a consumer protection lawsuit Monday against BlackRock, the world’s largest asset manager and a leading proponent of Environmental, Social and Corporate Governance (ESG) investing.
The consumer protection suit alleges that BlackRock has misled Tennessean consumers about the scale and impacts of its ESG initiatives for several years.
The suit further alleges that BlackRock’s own policies and corporate voting records demonstrate that its ESG push bleeds into financial products that are marketed as non-ESG funds, despite the company’s statements that it allocates capital where its clients request as a fiduciary.
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“We allege that BlackRock’s inconsistent statements about its investment strategies deprived consumers of the ability to make an informed choice,” Skrmetti said in a statement. “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 has more than $8 trillion in assets under management, according to the lawsuit. Because of its size and diverse holdings, the company has considerable influence over many American firms because of its large shareholder voting blocs, which Skrmetti alleges the company uses to push its own policies and preferences, including ESG policies that advance the decarbonization and climate agendas.
“We reject the Attorney General’s claims and will vigorously contest any accusations that BlackRock violated Tennessee’s consumer protection laws. Contrary to the Attorney General’s claims, BlackRock fully and accurately discloses our investment practices and our approach to proxy voting,” a BlackRock spokesperson told the Daily Caller News Foundation. “On behalf of our clients, BlackRock has invested approximately $40 billion in Tennessee, and we are helping more than 600,000 hard working Tennesseans retire with dignity. We are proud of our contribution and committed to the future in Tennessee.”
Many of BlackRock’s clients are institutional investors, including pension funds, endowments and foundations, official institutions, and financial institutions, according to the lawsuit.
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“BlackRock has agreed to use all of the assets in their portfolio to push the net-zero agenda,” Will Hild, the executive director of Consumers’ Research, told the DCNF. “If you have a dollar invested in BlackRock, you’re invested in an ESG fund.”
Conservative officials have sharply criticized ESG investing in the past for injecting politicized considerations into the traditional model of investing, in which maximizing returns is the top priority.
BlackRock’s ESG investing has drawn the scrutiny of Republican state officials in the past as well. Several red states, such as Louisiana and Missouri, have divested tens of millions of dollars of state assets from the firm and some of its competitors that similarly promote ESG investment. More recently, BlackRock and several of its prominent competitors have been involved in a House Judiciary Committee investigation into potential collusive agreements to push ESG.
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