BlackRock, the renowned fund giant, is preparing to mount a robust defense against a lawsuit filed by the attorney general of Tennessee. The suit claims that BlackRock has been disseminating false or misleading information regarding its investment strategies related to environmental, social, and corporate-governance (ESG) matters.
This is not the first time BlackRock has faced scrutiny from Republican politicians due to its ESG stance. However, Attorney General Jonathan Skrmetti’s lawsuit, which targets BlackRock under Tennessee’s consumer-protection laws, represents a novel legal development.
According to Skrmetti, “We assert that BlackRock’s inconsistent statements about its investment strategies have deprived consumers of the ability to make well-informed decisions. Some public statements portray a company solely focused on return on investment, while others emphasize special consideration for environmental factors.”
In response, BlackRock contends that it has been fully transparent in its fund disclosures and has not violated any laws. A company spokesperson states, “We refute the attorney general’s allegations and will vigorously challenge any claims suggesting that BlackRock has violated Tennessee’s consumer-protection laws. Contrary to the assertions made by the attorney general, BlackRock provides comprehensive and accurate disclosure of our investment practices and proxy voting approach.”
It is important to note that BlackRock serves over 600,000 residents in Tennessee alone. Nevertheless, the company and its CEO, Larry Fink, have faced opposition due to their strong support for ESG investing. In states like Florida and Texas, politicians critical of the ESG movement have expressed dissatisfaction with BlackRock and have even taken steps to withdraw state investments from its funds.
However, BlackRock has rebutted these allegations, asserting that it does not actively boycott specific segments of the energy sector.
In conclusion, BlackRock confronts a significant legal challenge as it is accused of disseminating contradictory information regarding its investment strategies related to ESG issues. The fund giant vehemently denies these allegations and pledges to defend itself vigorously against the lawsuit.
Distancing from ESG: BlackRock Faces Criticism in Tennessee
BlackRock, a leading investment management firm, is once again under scrutiny for its stance on environmental, social, and governance (ESG) considerations. CEO Larry Fink has distanced himself from the term, citing its politicization. However, BlackRock continues to be targeted by critics who oppose ESG investing.
The latest controversy surrounds Tennessee, where the state’s attorney general accuses BlackRock of issuing conflicting statements regarding the impact of ESG factors on its investment decisions. The lawsuit also raises questions about how BlackRock exercises its voting rights on proxy issues.
In response, BlackRock denies the allegations and asserts that it does not use its votes on climate-related shareholder proposals to push any particular agenda. The company emphasizes that its voting decisions are made independently and in the long-term financial interests of its clients.
Critics of ESG investing, a sentiment shared in the Tennessee lawsuit, argue that it creates a conflict between advancing policy goals and maximizing returns. However, BlackRock firmly rejects this characterization.
As a fiduciary, BlackRock’s primary objective is to maximize financial returns in line with its clients’ mandates. The company stresses that the money it manages does not belong to them, and they are bound to invest in accordance with their clients’ choices, best interests, and applicable law.
The ongoing controversy surrounding BlackRock’s stance on ESG underscores the ongoing debate around responsible investing practices. While the company remains firm in its commitment to its clients’ financial interests, the criticism persists.